You may be very surprised having found that self-processed payroll can be expensive. Business Week reports that "each year, 40% of small businesses pay the IRS an average penalty of $845 for wrongly filing their payroll taxes". Besides, companies overpay federal and state insurance for unemployment by over a million dollars per year. And in this way it creates a serious negative influence on a company's bottom line.
Timesaving. Using payroll outsourcing services, employers have far less paperwork and spend just a few hours on payroll each year. But the most employers spend estimated 60 hours. This gives more time for employer to focus on the actual business.
Legal protection. There is an employer's risk of legal mistakes since staying on top of federal and state tax regulations is a top priority for payrolling companies. But there is also a way to diminish it. In this case it may be done because of enlisting the help of a payroll outsourcing service. No doubt that knowing the rules and regulations on a state-by-state basis is a large process, and requires a great deal of administrative support. That's why outsourcing payroll has expelled the need for keeping up-to-date with changing laws, and has significantly diminished our legal risk.
Cost reduction. According to some editors, payrolling is typically the first service that businesses consider outsourcing - often at the advice of their accountants. It will be cost a great deal less if you use a payroll processing service than hiring an additional employee to handle payroll. Do not forget that time is money. If the person who handles payroll, for example, spends 60 hours processing payroll each year, then a significant portion of his or her salary goes toward managing payroll. But if the business owner processes payroll, the cost may be two to three times that amount. We may consider such thought that the value and cost advantage of using a 3rd party vendor versus hiring additional staff as one of the key benefits of outsourcing payroll.
For many companies the bottom-line profits of outsourcing payroll are incontestable. For some, it is a matter of convenience and keeping employee resources, while for others it provides reduced risk and peace-of-mind with regard to legal pliability. Eventually, many are realizing that through the time and cost savings of outsourcing, resources otherwise spent on the payrolling process can now be redirected toward key business objectives.