Should You Outsource Your Payroll?

 Many business consultants urge their clients to outsource non-core functions— those not required to fulfill the value proposition of a company to its customers. On top of their list is usually payroll. The main reasons why we cover here.
1. IRS Penalties: According to the IRS, 40 percent of small businesses pay penalties each year for incorrect or late filings and payments. The penalties range from two to 15 percent, depending how late the payment. Most payroll services provide a tax guarantee. This usually covers the company when penalties are incurred.
2. Free Up Staff Time and added expenses: Managing payroll is time consuming, with direct costs $2,500 a year or more businesses with six to 10 employees. Businesses need to comply with many laws governing payroll taxes. Outsourcing can reduce these costs and remove headaches.
3. Security: There is always the potential of theft and embezzlement by employees, even long-term trusted staff.
4. Losing Payroll Knowledge: Businesses with in-house payroll assume the risk of their payroll person taking a leave of absence or resigning, thus possibly losing vital knowledge of payroll tax laws and mandates.
5. Having Payroll Expertise at Your Fingertips: Few small businesses are able to keep up with the ever-changing regulations, government forms and withholding rates. Outsourcing companies eliminate these problems.
6. Using Outdated Versions of Payroll Software: Small businesses may not realize they are using an older version of payroll software with outdated tax tables. The result can mean heavy penalties.
7. Providing direct-deposits: Eliminating issuing paychecks in house ends reconciling individual payroll checks and paper handling errors, and saves time. Employees appreciate eliminating trips to the bank.
Outsourcing payroll removes the worry about paying employees correctly and on time. If you have questions about whether to outsource, call us. We will gladly provide you advice.
For more information concerning Professional Tax Services, call 661-259-1967. Through the EZ2 Thrive program, Professional Tax Services provides unlimited complimentary advice on income and payroll taxes. For information on how you can receive advice at no cost, visit www.scvprotaxservices.com.