1. 8 Reasons to Outsource your
Payroll Processing
Todd Cencich
Major Market Account Manager
2. 8 Reasons to Outsource Payroll
1. Avoid IRS Penalties
According to the IRS, 40 percent of small businesses pay an average penalty of $845 per
year for late or incorrect filings. Most national payroll services provide a tax guarantee,
ensuring that there will be no penalties and taking responsibility for penalties when they do
occur. In many instances, this immediately cost justifies outsourcing payroll.
2. Reduce Costs
The direct costs of processing payroll can be greatly reduced by working with a payroll
provider. Our research indicates that a small business of 10 employees will typically spend
$2,600 per year in direct labor costs associated with payroll.
3. Alleviate Pain
Payroll is a headache in the best case and a nightmare in the worst case. Business owners
that outsource payroll eliminate a tiresome source of personal pain.
4. Enable Direct Deposit
Providing direct deposit is difficult is a company doesn’t use an outside payroll service.
Increasingly, small businesses recognize that employees want direct deposit – not having to
make a trip to the bank is an important convenience for them. More importantly, for
business owners, direct deposit eliminates time-consuming and error-prone paper handling.
3. 8 Reasons to Outsource Payroll
5. Create Free Time
Payroll processing is a time-consuming process. Outsourcing payroll can free up staff time
to pursue more important value-added activities.
6. Avoid Technology Headaches
A constant question for the small business owner is whether or not they have installed the
latest version of software and the most recent version of the tax tables – using the wrong
tax tables can result in stiff penalties. Outsourcing payroll removes the technology
headaches of keeping your payroll software up-to-date and running smoothly.
7. Leverage Outside Payroll Expertise
Most business owners and controllers don’t have time to keep up with constantly changing
regulations, withholding rates, and government forms. By outsourcing payroll, a small
business can take advantage of expertise that was previously available only to big
companies.
8. Avoid Payroll Knowledge Walking Out the Door
When your bookkeeper or controller gets a new job, they often walk out the door with their
knowledge of the payroll process and how you do it. Using an outside services eliminates
that business risk and the need to train any new employee.