Why it Pays Off To Outsource Your Payroll

Why it Pays Off To Outsource Your Payroll

When companies look to reduce costs, they often concentrate solely on their variable costs. However, reducing a company's fixed cost structure is far more impactful and leads to more consistent savings over time. To accomplish this, companies often outsource certain business operations. Outsourcing allows companies to reduce costs, free up valuable resources and if possible, improve their service capabilities. Unfortunately, being able to accomplish all of these isn't easy. However, there is one business function that every company should outsource. It not only reduces costs, but saves a tremendous amount of time, as well as drastically improving a company's service capabilities. Interested in knowing what it is? It's outsourcing payroll.Outsourcing Payroll Saves on Late FilingsWhen companies outsource payroll, or use a payroll software, they forego the burden of manual payroll processes. This not only makes it easier and saves money, but has an added benefit in that it saves these companies from being penalized by the IRS for late or incomplete filings. In fact, according to the IRS, almost half of all businesses are penalized for incorrect or late filings. Being able to avoid this added cost simply makes good business sense. However, there are other advantages to outsourcing payroll.Outsourcing Payroll Companies are Experts in Payroll ManagementPart of the issue with penalties by the IRS is due to the fact that most companies simply can't keep up with the myriad of tax laws, government regulations, tax codes and procedures that accompany payroll management. To this extent, outsourced payroll companies are tax experts. They manage all aspects of the company's payroll. They are experts in direct deposit and manage a company's entire compensation program. In addition, most payroll firms will guarantee that any late or incorrect filings will be covered or reimbursed. These firms are tasked with ensuring that every employee receives their pay on time and in the correct amounts.Outsourcing Payroll Protects Important KnowledgeWhen companies measure the impact of lost employees, they must always account for the knowledge that leaves with them. There are all kinds of studies analyzing the impacts and costs of employee turnover. These costs pertain to losing an employee with vital knowledge and the time it takes to train a new employee. However, this simply isn't a concern with outsourcing payroll. Payroll software programs allow users to complete an employee's W-2 form electronically. Problems are mitigated, easily corrected, and payroll software systems are well known for their "ease-of-use" benefits and the simplicity of user interface when compared to manual payroll processes.When companies review the benefits of outsourced payroll and payroll software programs, they often see the net benefit as being in the driver's seat. Companies are able to avoid the time consuming processes involved in manual payroll and are able to dictate their terms of service. They avoid the issue of late filings and if their chosen outsourcing firm doesn't meet their expectations, they can always move that business to a firm that will. In the end, outsourcing payroll improves a company's cost structure, saves on time and dramatically improves their service capabilities.

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