Payroll services are often handled by third party payroll service platforms for small businesses. It seems more convenient and surprisingly cost effective than to have a dedicated person or team to do payroll. However, handling payroll services can be tricky. A small error can result in a major financial faux pas and can lead to expensive penalties. One of the major hurdles is in keeping track of changing tax laws and deadlines. The IRS has reported that one in three employers is penalized for payroll errors, and the penalties are stiff. Thus, unless you are confident that the in-house team can handle all the payroll tasks effectively, it makes more sense to utilize payroll services.
Reasons to outsource payroll services:
Saves time: An in-house team to completely handle payroll tasks requires infrastructure, software and trained employees. This can often be an expensive proposition. Small businesses can better utilize their resources by hiring employees for core functions and outsourcing other requirements to competent providers.
More efficient: A good payroll provider has the expertise and resources to handle payroll requirements efficiently. They have the knowledge of payroll procedure and a sound payroll program to handle your needs. You can be sure that no tax filing obligations or deadline will be missed thus saving you a lot of financial migraine and operational hassles.
Zero payroll errors: Good payroll providers keep track of changes in tax regulations. This helps avoid errors, missed tax deadlines and hefty penalties from the IRS.
Services offered by Payroll service providers:
While outsourcing payroll services, ensure that you enlist the services of a reliable and experienced payroll service provider. Taking references from others helps. This is to ensure that your provider expertly handles the payroll needs.
These are the services provided by payroll agencies:
- Takes care of paying employees on time
- Maintains data about hours worked for all employees
- Calculates employees’ taxes
- Prints and delivers checks
- Keeps track of funds in bank accounts
- Keeps track of payroll checks issued
- Pays all payroll State and Federal taxes in a timely manner
- Files payroll tax forms before stipulated deadlines
- Provides regular reports to the management
You can also opt for additional services like:
- Tie-ins with 401(k)
- Tie-ins with Section 125 mutual fund plans
- Direct deposit of checks to the employees’ bank accounts
- Issue W-2 forms
These normally come at an added cost that varies from provider to provider.
Before finalizing your payroll services provider, do a check of their credentials, experience and the clients they have serviced. Also in the time period when you are transitioning between doing in-house payroll to an outsourced agency, keep a keen eye on the migration. Thoroughly review the first few paychecks to ensure that the starting numbers are tying up.