Find the Freedom to Grow Your Business with Outsourced Payroll

Based on a company’s size and evolving goals, payroll responsibilities can fall anywhere from HR to finance and even the founder. For businesses that are quickly growing in number of employees, or for businesses that wish to prioritize high-level strategic initiatives, outsourcing payroll can be the stepping stone to an in-house payroll department or to simply free up time from specialized accounting tasks. By understanding a payroll department’s role and the offerings and benefits of outsourced payroll, you can gain a better understanding of how to meet your needs and take your business to the next level.

The importance of payroll expertise for your business

A payroll department’s primary function is to ensure employees receive their pay on time, with the correct amount, the requisite deductions and additions. The payroll department makes these adjustments every pay period and performs reconciliations and audits.

For a startup or small business with a minimal finance department, having an experienced payroll professional can both streamline increasingly complex tasks and maintain compliance. Payroll taxes cannot simply be calculated and sent at the end of the year—they must be regularly deposited with the appropriate authority. A professional with payroll knowledge ensures government entities receive their tax revenue in the correct amount and in a timely manner while also ensuring compliance with changing tax laws.

Each state has its own set of tax laws, significantly complicating the filing process for any interstate business. Employing remote personnel who fall under another state’s jurisdiction require the payroll department to have knowledge of the resident state’s taxes. Payroll services ensure these laws are monitored and employment records are accurately maintained and updated  through a government-mandated payroll duty.

Dedicated payroll professionals can grow with you

Eventually, as a business becomes large enough, it will need a full-time payroll department. An in-house payroll specialist can help with government challenges, including tax law changes like the Tax Cuts and Jobs Act of 2017 with its complex and extensive consequences. Many small tax changes are enacted every year, so it’s essential to be aware and make on-time tax deposits.

In addition, companies with many employees or with variable-hour employees must maintain more records, update them more frequently and pay close attention to their obligations. Contractors, one-time tasks and other non-recurring employment schemes demand their own set of filings, such as 1099s for contractors.

However, companies who can’t yet support a full-time hire can avoid underutilization and get flexible expertise that matches their needs. Whether hiring a fractional professional for ongoing support or to help optimize the current finance department, a dedicated expert is vital to taking the next step as a business.

When outsourced payroll makes sense for your business

A company may outsource payroll when it finds that its internal payroll resource, sometimes the founder, can free up time and prioritize strategic business initiatives by turning over time-consuming administrative and compliance payroll tasks, payroll taxes and payments.

It may also be time to outsource payroll functions if your current system is causing mistakes. This could become a liability, as it may lead to increased costs, lost productivity by personnel, a lack of compliance with labor or IRS laws and delayed paychecks. If the system becomes too challenging, businesses may be subject to costly tax penalties.

Other times, outsourcing payroll may be an option if there are a lot of payroll changes with each pay period. Your company may have employees working at various hours each week or at a large turnover rate. In this case, outsourcing payroll can save time and be cost-effective.

For companies in the growth stage, outsourcing payroll can help with scalability needs. For example, growing companies may have been penalized in the past for either late or incorrect tax payments and will want to get this burden off their books. And some businesses find that as they grow, meeting record-keeping requirements, maintaining data security and training in payroll-related technology is hard to handle internally.

What can an outsourced payroll specialist do for your company?

Outsourcing payroll begins with hiring the right payroll expert. You will discover a fractional payroll expert can perform numerous, specialized tasks including:

• Calculate timesheets, wages, deductions and state and federal payroll taxes
• Make tax withholding payments
• Ensure the correct amount of payroll taxes are deducted from each paycheck, including employee benefit deductions such as retirement contributions and health benefits
• Pay employees through printed checks or direct deposits
• File requisite government reports
• Improve payroll processes

Along with task completion, payroll specialists provide invaluable skills:

• Enjoy expertise. Fractional payroll specialists know the ins and outs of payroll processing and payroll taxes. This results in fewer missed deadlines, errors and late payroll and tax filings.
• Minimize expenses. Companies can reduce expenses and quantify both hidden and visible payroll management costs through more effective payroll processing.
• Increase efficiency. Specialized professionals can simplify and implement faster payroll processes, streamline employee and payroll information and stay up to date on regulations.

Working optimally with your outsourced payroll service

While there are many benefits to payroll outsourcing, there are considerations to keep in mind in order to obtain better value from your outsourced payroll service. The following actions will enable you to build a more effective relationship with your fractional expert.

• Prevent security challenges. You will want to protect wage and HR data when outsourcing payroll. When using an outsourced payroll specialist think about their access to payroll figures and employee data in order to perform payroll responsibilities. There will also need to be mutual trust between you and the fractional expert.
• Determine costs. Outsourced payroll staff and services cost different prices. Review your business needs and determine what meets your budget. You can also consider tailoring a firm’s offerings to cut costs.
• Understand IRS responsibilities. Companies are ultimately responsible for depositing taxes and record keeping. When outsourcing payroll, you will need to perform due diligence and implement policies for auditing and ensure tax deposits and records are properly maintained. Outsourced professionals will likely be aware of this requirement but you will still need to protect yourself to avoid potentially failing to pay required taxes as this responsibility lies with you.
• Research a vendor’s reputation. Besides conducting research for outsourcing payroll costs, you should also review and ask questions about a potential firm’s business history, stability, and its payroll outsourcing personnel. This will help determine if the firm will be there for the duration and with reliable fractional experts.

Simplify your payroll obligations

Experienced fractional professionals handle a variety of specialized payroll obligations for your business. They can also help your business go to the next level with specialized insight and leadership. Paro offers payroll solutions payroll solutions for your business, including timely payment delivery, payroll tax filing, wage earning calculations and more under the guidance of a vetted fractional expert.

Looking for fully outsourced bookkeeping services ? Paro offers those as well.