Payroll outsourcing: Good or Bad?
Payroll Outsourcing: Good or Bad.
Handling payroll service in-house requires a team of individuals having expertise in payroll management. Payroll is no more mere processing of payslips but also requires managing several things such as employment regulation, employee data, W2S, state, & federal rules and regulations, etc. And if your business lacks in-house skills and facing time and budget constraints, you outsource your payroll services.
What are the pros and cons of outsourcing payroll?
Pros of outsourcing payroll :
When you opt for outsourcing payroll to professional experts like Meru Accounting you can trust our qualified experts.
Our professionals can effectively manage payroll processing and other complexities associated with it. When experts who have years of expertise in payroll processing works, the chances of error gets minimized in case:
1. Payments and Deductions.
2. Local and state payroll taxes.
3. Employee benefits.
4. Paid off time.
5. Additional benefits such as a pre-tax commuter fund.
2. Low risk of violation and fines
Handling payroll taxes is not as simple as it seems. Tax codes applicable vary according to localities, states, and countries. As per the Internal Revenue Service, nearly 1 million US businesses every year have to pay penalties. Payroll outsourcing organizations have experience in handling these intricacies and helps avoid the risk of penalties for payroll violations.
Outsourcing payroll helps businesses to save a substantial cost and labor hours spend on payroll processing. Consider the local pay rates and your organization size in-house payroll would be way more expensive than outsourcing. Outsourcing payroll service providers charge a flat rate per paycheck. Small businesses on the growing stage can benefit from outsourcing to focus more on the core business.
4. Keeps your data safe and secure
Confidentiality of business information is a major concern in this digital era. Quality payroll service uses advanced systems and encryption software to keep the employee data of their client safe and secures. It is crucial when you have to transmit large data containing personal and business information. Outsourcing also mitigates the risk of embezzlements, identity theft, and internal data breach.
Cons of payroll outsourcing:
When outsourcing to the firm, having manual data entry may lead to a risk of human error. But, an online payroll processing organization allows employees to enter their hours directly. And then transfer it to the firm for processing. Of course, there is some possibility of risk, but the risk is less when considering individuals making entries than mass entry by a centralized team.
2. Business obligation still exists
Outsourcing your payroll to an external partner doesn’t do away with your payroll obligations. While expert handling reduces the risk of tax code violations, errors can still occur. And when an error occurs, the authorities can issue a fine to the payroll partner, even to the employer.
Outsourcing makes you reliant on a third party for sensitive information. There is always a concern back on your mind to able to access data at a later time. You must make sure the employee data information is safe and secured. You must opt for an external partner that safeguards your concern and know about the contingent plans in case of an adverse business situation.
4.How to deal with shortcomings?
Payroll outsourcing is ideal for many businesses. However, the shortcoming of outsourcing might make you skeptical about it. One of the best ways to deal with it goes for cloud services or online payroll services. Online payroll provides remote access to your business information on a real-time basis. You can connect 24×7 via phone, skype, and WhatsApp.
Meru Accounting provides end-to-end online payroll processing service at hourly rates. With us, you will have an expert team of CPAs, CAs, and experienced accountants to ensure the efficient processing of payroll.
