Payroll Outsourcing: Is is wise to offshore your payroll?

Payroll processing is a business function that seems to generate a great deal of angst and annoyance.

This is espeically true in small to mid-size businesses. The perception is that payroll takes a great deal of time and energy and also is fraught with risks such as end-of-year tax penalties and potential lawsuits from employees.

So, is payroll is taking too much of your time and your company's resources?

Consider looking into payroll processing outsourcing. There are an enormous number of domestic and offshore providers and companies who specialize in this area.

Many providers are offering online payroll solutions. That is, after they have set-up your payroll system, they give you a website where you can log-in and submit employee hours.

The company then does all of the work, including printing and mailing the checks. And don't worry if the company is overseas. Most have local bonded offices that can print and mail checks from your home country, ensuring timely delivery. Or perhaps, you simply want them to send you the completed data-file and you print your payroll checks in-house? That can be arranged.

The Benefits of Outsourcing Payroll Processing

Obviously, an outsourcing company should offer to save you a substantial amount of money on your payroll processing. Onshore providers often advertise savings of 40% - 60%. Offshore companies often advertise greater savings. However, the cost-savings do not include increases in your productivitity when you factor in increased time to spend on your core business competencies.

Let's briefly consider each benefit:

1. Avoiding IRS Penalties and Fines.

Many small businesses don't have the time or energy to keep up with constantly changing regulations, withholding rates, and government forms. By outsourcing payroll, you can take advantage of expertise that will handle those headches for you.

Nearly 45% of all small and midsized businesses pay the IRS penalties on a yearly basis. The penalites are most often related to late filings and mistakes and corrections to current filings. Many reputable outsouricing providers will provide a penalty gaurantee, stating that you will not get a tax penalty, and that if you do the oursouce company will pay it.

2. Reducing Costs and Increasing Time for Other Business Functions.

We have already covered this topic somewhat. But again, consider that you will not only save money on labor costs, but also increase time that you and your employees can spend elsewhere. Outsourcing payroll creates time for revenue-generating activities.

3. Reducing Software and Technology Costs

You will no longer need to worry what the best accounting and payroll software is, whether you have the latest version nor if it is compatible with you computer systems. Your payroll provider will take care of all of that.

4. Avoiding the Hassles of Losing Key Payroll Personnel.

Have you ever lost your bookkeeper or account and felt like you had to start your payroll department all over again? No more. A payroll company eliminates that headache.

5. Offering Direct Deposit.

Increasingly employees expect to have access to direct deposit. It can be difficult for a small company to set-up. Let your outsourcing provider set it up for you.

Ok, is that enough information for you? Ready to consider outsourcing your payroll? Time to research some providers.