In any organization, payroll is a crucial function. Your staff is assisting you in achieving your company’s goals. And they want to be paid on time for their work. The happier your employees are, the more efficiently your business will operate. When it comes to payroll, businesses have many options regarding how they want to handle the process.
Instead of dealing with payroll in-house, you can hire a company specializing in payroll services. This third-party company can handle all or part of your payroll functions. For example, they can calculate pay, issue payments, and file taxes.
Whether to outsource your payroll or keep things in-house depends on the complexity of your business and if you have the right skill set to do so.
Here we will explore the pros and cons to help you make a more informed decision for your business.
The pros of outsourcing payroll
Outsourcing payroll has many benefits, which is why it has become a popular option for businesses.
A significant benefit of outsourcing payroll is that it can save you time. Payroll-related tasks can be cumbersome and take a lot of time. You can reduce this additional administrative responsibility; when you outsource your payroll, you no longer have to worry about the administrative tasks that come with it.
Your time will be free to focus on more important things, like growing your business.
Pay employees on time
When you outsource your payroll function to a reliable firm, you can be confident that your employees will get paid on time and correctly. This is because the payroll provider ensures that all workers are adequately compensated and on time.
Knowing that you will always pay your employees correctly and on time can give you peace of mind. In addition, when employees know they get paid on time, it can also improve employee satisfaction, which will indirectly help your business.
Avoid penalties and interest fees for non-compliance
Outsourcing payroll can help you to avoid penalties and interest fees. As long as you do your due diligence and hire an experienced provider, all necessary payroll tasks to be done promptly and accurately.
The outsourced partner can take care of filing deadlines and ensure you avoid any penalties.
Payroll errors can be costly. They can result in overpaying or underpaying employees and fines from the CRA. However, you can avoid these expensive errors when you outsource payroll, as the company you hire will have experience dealing with payroll.
The cons of outsourcing payroll
Of course, delegating your payroll tasks to a third-party company does have some downsides.
It can be more expensive.
Doing payroll in-house is likely the cheapest option. Third-party providers, especially reliable ones, will charge more for their experience and services. Whether you choose to delegate part or all of your payroll function can depend on how complex your needs are.
You will have less control over the process when you outsource your payroll. For some businesses with standard procedures, this might work. For others, where you might have more complex or variable employment contracts, it can be time-consuming to work with a third-party company.
You are ultimately responsible for your employees being paid on time and in full. When a third party is involved, you will still need to ensure payroll tasks are completed on time.
Anytime you hire a third-party company for business services, there is always the potential for issues. For example, there can be issues with data security for confidential information or service quality.
When outsourcing payroll, it is essential to do your research and make sure you hire a reputable and reliable company.
The cost of payroll services typically changes depending on the number of employees on each payroll run. Additional services such as tax filings or providing options on how your employees are paid may come with additional fees.
How to decide if outsourcing your payroll is right for you
Outsourcing payroll has pros and cons. It is essential to weigh all of the factors before making a decision. If you decide to outsource your payroll, make sure you choose a reputable firm that is experienced and provides a good service.
Whether you outsource your payroll may depend on several factors, including your business size, budget, and comfort level with outsourcing.
If you have a small business with a limited budget, you may not have the luxury of choosing when outsourcing your payroll. However, if you can outsource your payroll, it can save you a lot of time and money in the long run.
No matter what size your business or your budget is, you should weigh the pros and cons of outsourcing before making the right decision for your business.
Contact Edelkoort Smethurst CPAs LLP in Burlington for Payroll and Accounting Needs
If you are looking for advice on how to set up your payroll function, our team of skilled accounting professionals can help advise you on the growing needs of your business. At Edelkoort Smethurst CPAs LLP, our financial experts can provide services to support your accounting and payroll function, whether you need partial or complete support. To learn more about how Edelkoort Smethurst CPAs LLP can provide you with the best accounting expertise, contact us online or by telephone at 905-517-2297.