How Payroll Services Can Help You Save Time, Money and Resources

Employee payroll can create a serious headache for small and growing businesses.

Payroll for small business is complicated. Your firm may not have the need or resources for a full-time payroll person, but you’re still exposed to all of the same intricacies and legal obligations as your larger counterparts. Payroll mistakes can have far-reaching implications, impacting everything from privacy and compliance to employee morale.

Third-party payroll providers help to bridge the gap. They allow you to outsource the challenges of payroll, handing them over to a third-party service and software solution. This frees up your time to grow the business and focus on other tasks.

If you’re a small business owner

You probably have no desire to become a payroll expert. However, you are still obligated to complete processes properly and pay people accurately and on time.

Payroll best practices matter. A surefire way to destroy employee morale is to pay people late or inaccurately.

In this article, we look at how payroll services can save you time, money and resources. First, let’s look at the typical features of payroll software and services.

Features of Payroll Software

So, what do payroll companies do? They typically provide a cloud-based software product, alongside expert support from payroll experts who can assist with queries and compliance issues.

Typical features include:

• The ability to feed in staff salaries and hours, run regular payroll and distribute money both to employees and tax authorities.
• Integration with other company financial systems, 401k providers and time tracking systems.
• Tracking for sickness and paid vacations.
• Management of staff expenses such as mileage.
• Filing of legal payroll documents such as annual and quarterly return forms.

In some cases, payroll packages go way beyond payroll itself. They offer comprehensive HR management functionality that touches on everything from benefit admin to recruitment and learning management. Paycor is a good example of a payroll service provider that offers a broad solution for the whole HR function.

Saving Time, Money and Resources: The Benefits of Using a Payroll Service Provider

Convenience

Payroll packages keep all related information in one place, rather than strewn across paper files and manually maintained Excel documents.

Payroll is an intricate process that requires a considerable amount of personal data for each employee. The calculations can be complex, with a significant risk of error when the work is done manually. Payroll providers help enforce best payroll practices, whilst minimizing manual work.

Compliance

There are over 15,000 different tax codes in the US alone, alongside a constantly evolving landscape of new allowances and regulations. Different states have different deadlines and reporting requirements.

This is incredibly difficult for a single person to keep track of – especially a person without a background in payroll and tax admin. It’s hard enough for companies operating in just one country, let alone those with an international workforce. Some payroll packages, such as Remote, are geared up for companies with global operations.

In 2020, the IRS issued around $6 Billion in fines to companies who had made errors in employment taxes. Outsourcing payrolling to a specialist company can reduce the risk of this happening to you. 

Payroll related fines are common, and a genuine risk to your company. Even innocent mistakes can cost.

Cost Saving

As a small business owner, your time has considerable value. Even just two days per month working on processing payroll is two days you’re unable to spend on profitable work or business development. The cost of a payroll service is (relatively) trivial, and likely to represent a significant saving over using your own time, or paying a dedicated freelance bookkeeper.

Then there’s the cost of mistakes. We’ve already talked about the potential of fines for non-compliance, but there’s also the risk of over-paying employees, or handing too much money over to the tax authorities. 

Security

Payroll processing, by its nature, involves processing sensitive and confidential information.

Payroll providers tend to offer strong “enterprise grade” security for this data. Using a single system means that data related to employee’s income and tax affairs can be kept in one place, and not kept in insecure files elsewhere.

Employee Experience

Payroll errors matter to employees. An underpayment can result in mortgages, rent payments and bills going unpaid. This can then have knock-on effects on credit ratings, causing legitimate stress and hardship.

It’s little wonder that 49% of workers say that they tend to start looking for a new job “after two paycheck errors.”

Manually processing payroll, especially without expert knowledge, puts staff loyalty and morale at risk. Slow manual systems for tracking things like hours worked, mileage claims and overtime also place extra pressure on staff.

Once again, a centralized payroll system can help with this, providing staff with a simple interface for managing their salaries and hours worked. 

Benefit Admin

In the modern workplace, employees consider far more than just the headline salary. 60% of employees consider the overall benefits package as “one of the most important contributors to job satisfaction.”

A comprehensive package of benefits requires considerable admin: 401K contributions, health plans, paid time off, life insurance and much more. Many of these things have complex tax implications, further adding to the administrative burden.

Benefits admin is a key component of many payroll packages, saving internal time and resources.

Additional Functionality

In a competitive marketplace, payroll platforms compete for customers by adding additional functions and services, such as:

• 24/7 access to payroll, compliance and HR experts.
• Integrations with other third-party software.
• Talent and appraisal management.
• Automated tax filing.
• Risk management functionality.

Payroll expenses are often the most significant outgoing for a business, accounting for an average of 70% of expenditure. Payroll services help you to get the details right, without having to dedicate regular chunks of (unpaid) time to processing payroll.