Here’s Why You Need to Outsource Your Contractor Payroll
There aren’t enough hours in the day to successfully execute every aspect of business personally. If you’re struggling to make payroll each pay period, you’re missing out on valuable time you could be spending growing your business. Balancing all the internal operations of a business can be tricky, especially when it comes to payroll.
As your business grows, so will its payroll demands. The increasing payroll duties often lead business owners to seek other alternatives, like outsourcing. Typically, when an aspect of a business is outsourced, results aren’t always ideal. However, payroll outsourcing seems to be in a category all its own, and businesses that outsource their payroll department have a lot of benefits at their disposal.
In-House Payroll Wastes Time and Money
A recent survey by the National Small Business Association (NSBA) found that about 40% of small businesses outsource their payroll department. The majority of those that did spent $500 or less a month on outsourcing services. That amount sounds steep at first, but let’s look at the amount of time they save. Enterprises that didn’t outsource payroll claimed to have spent six hours or more per month handling their own payroll. That’s about two work weeks per year just doing payroll! Furthermore, at an average cost of $36 per internal payroll employee, that’s more than $2,500 a year. Instead of spending that much money and dedicating that much time to internal payroll, it’s easy to see why many companies choose to outsource.
Payroll Duties Are Complex
Payroll is complicated. Aside from actually cutting the checks and handing them to your employees, there’s much, much more that goes on behind the scenes. Typically, when payroll is outsourced, the complicated tasks go along with it, like 401(K) management, employee benefits, federal and state tax considerations. No wonder companies with internal payroll spend nearly two weeks per year working on payroll!
And Internal Payroll Is Prone to Mistakes
More importantly, outsourcing actually increases compliancy and accuracy with payroll-related laws. Tax laws and codes change frequently, and many small business owners simply don’t have the time to keep up. In fact, Inc. suggests roughly one out of three business owners have been penalized by the IRS for a payroll mistake. Outsourced payroll greatly decreases this statistic. Payroll companies are typically experts in tax laws. Many offer some sort of financial liability protection as well, meaning you’re safe even if there’s a payroll error.
Is It Time to Outsource?
Outsourcing your payroll department can save you a significant amount of time and money in the long run – as well as the headache of accounting mistakes. But how do you know when it’s the right time to outsource? If your payroll needs change frequently, for example, or your employees work different hours every week or in different states, it may be time to consider outsourcing. Additionally, if your business is growing and you just don’t have the time to deal with complicated payroll tasks, outsourcing can recover the time you’ve lost.
Outsourced payroll services like Contractor in Charge can give you the time you need to focus on growing your business. Find out how to put your company “In Charge” – schedule a call with us to get a free quote!