Benefits of outsourcing payroll
Time Savings / Productivity
Payroll processing inside your business is a time-consuming process. Keeping track of benefit deductions, garnishments, new hires and terminations, paid time off as well as legislative regulation changes can be frustrating tasks. Outsourcing payroll allows employers to concentrate on their core business and frees up the business owner to work more on strategic tasks that could ultimately affect your bottom line. Regardless of the number of people employed by your business, attending to payroll demands a great deal of time and attention to detail. Pay period follows pay period, requiring the business owner to input critical amounts of data and double-checking for any keying errors- time taken away from tasks a small business owner must attend to. Those repetitive tasks should not be hours taken away from a key management or owner’s daily productivity. Outsourcing payroll immediately frees up precious time.
The direct costs of processing payroll can be greatly reduced by working with a payroll provider. Big businesses can afford to maintain robust payroll departments. However, Small/medium sized businesses, having an in-house payroll process is a money
burner. If your business has fewer than 100 employees, there’s a very good chance that you can save money by outsourcing your payroll operations. Do the math. Figure out how many labour hours your employees are devoting to payroll-related activities, calculate how much you’re spending and compare the amount to the plans offered by BVK.
You’ll probably be surprised by the result. When you consider the cost of an employee’s wages, then add in benefits, that can really add up quickly. If you are the owner of a small to medium size company and you are trying to do payroll yourself or in house, the cost of the time spent is even greater. If you outsource payroll, you don’t have to worry about your payroll processing company calling in sick, resigning, wanting to take a vacation OR wanting to request a possible maternity leave that you have to pay for.
There’s also the matter of confidentiality when it comes to payroll. If an employee wants to “share” how much a fellow employee is making that can cause extreme drama in the workplace. A common response from several clients is, “It is much more efficient than if I asked mybookkeeper to handle it, or if I tried to handle it myself.” Most accountants will also tell a business owner to outsource payroll. Many of our referrals come from accountants who have just recommended the benefits of outsourcing payroll to their clients.
Avoid SARS penalties
40 percent of small businesses pay an average penalty of R8450 per year for late or incorrect filings and payments. Penalties for errors, omissions or late payroll tax filings can be very costly. Payroll mistakes are painful, angering employees and not reporting timely or accurately to the government post red flags to SARS. Small business owners aren’t experts in the challenging world of government tax regulations. At the same time, they are legally responsible for any cases of misrepresentation or a failure to
accurately report employment.
Mistakes lead to audits and penalties—situations no business wants or needs. Government rules and regulations are always changing and business owners can’t be expected to stay on top of these changes. Professional payroll providers, on the other hand, must stay current with rules, regulations and changes in tax rates. A good payroll-services provider is far less likely to make a serious error than your in-house staff.
Many outsourced payroll providers calculate payroll taxes, manage filings and payments and will assume the cost of penalties due to incorrect calculations or late payments so long as you provide the necessary information and funds on time. Keeping abreast of SARS, regulation changes can be at best a real challenge. A reputable outsourced payroll provider has a staff dedicated to keeping up to date on all of the changes that could affect your payroll, ensuring that you stay in compliance. Team of Experts. Most business owners and payroll related staff don’t have time to research and study constantly changing regulations. By outsourcing payroll, a small business can take advantage of expertise that was previously available only to big companies.
Payroll processing is a complex and potentially risky business operation. Even with long time trusted employees, there is always a risk of identity theft, embezzlement of funds, or tampering with company files for personal gain. There’s also an evident risk when using in-house payroll software: How safe and secure is payroll data on the company’s server or network? This very real question can consume a business owner’s energy and attention as well. Do you have the time and energy to closely supervise your business’s payroll for time and rate abuses and other unethical activities? Most payroll services offer a “safe haven” for your confidential payroll data. In addition to redundant backup and multiple server locations, a quality payroll provider invests in state-of-the-art systems for storing and protecting data, simply because it’s part of the service provided to clients. Please check out our client.
Avoid Technology Advancement costs A constant question for small business owners is whether they have the latest version of their payroll software and the most recent tax tables installed on their computer. Using the wrong tax tables can result in stiff penalties. Paying a maintenance fee and having to upgrade software is a fixed cost ongoing. Outsourcing payroll removes those costs / headaches and keeps payroll running smoothly.
Losing payroll expertise
Multi- tasking payroll responsibilities with an overworked office manager or accounting employee, depending on a relative or spouse to run payroll, whatever the situation, every business with in-house payroll runs the risk of receiving notice that your payroll person is taking an extended vacation, fell ill, took another job or not able to do payroll. If your bookkeeper or controller gets a new job, they will walk out the door with their knowledge of the payroll process and how you do it.
Outsourcing your payroll will assure retaining the knowledge of all the ins and outs of payroll-related tax laws and regulatory mandates. It’s what payroll companies and experts are trained to do and part of the guaranteed service provided. Savings in time and money, greater data security and the comfort of knowing experts are handling your payroll functions are compelling reasons to explore the benefits of outsourcing. Your staff could try to achieve the same level of understanding, but it would take a large investment in time and effort. It’s what they’re trained to do and part of the guaranteed service they provide. With a payroll service, output speed and quality won’t vary in accordance with vacations and illnesses.
You also won’t have to spend time helping new hires understand your business’s payroll system. If you experience turnover or inability to work for periods of time in your payroll area of your business, outsourcing payroll provides a framework to be able to train an employee to report hours and communicate the payroll data without experiencing the pain of a missing skillset of an expensive in house payroll professional. This one of the key benefits of outsourcing payroll.