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Outsourced Payroll Saves Companies Time and Money

In a downward economy, businesses often seek various methods for streamlining their operations while improving efficiencies. At times such as these, outsourcing non-core functions such as payroll and employee administration has become an attractive alternative for many businesses.

Technology is an important factor in outsourcing. PC- and Internet-based technologies have made it possible for employers of all sizes to have access to a wealth of comprehensive, easy-to-use applications that will save their companies money and alleviate the burden on payroll and human resource staffs.

Why outsource your payroll?

Small businesses, which make up 98 percent of all U.S. businesses, can be hard hit by a lack of payroll expertise. According to the Small Business Administration, small business owners spend approximately 35 to 45% of their time handling HR tasks, which takes attention away from core business activities.

Many small business owners may not be aware of the time or the cost savings involved with outsourcing. In fact, The Outsourcing Institute estimates that companies that outsource HR and payroll functions experience a cost savings of at least 9%.

Additionally, tax filing and compliance can be complicated and costly for small businesses. According to the IRS approximately 40% of small business owners that do not outsource are fined an average of $845 each year by the IRS for inaccurate tax filing.

1. Save time
   
   By using a payroll service bureau you can focus on growing your business rather than spending hours on processing payroll. Many Internet payroll services, which are designed for small business owners, make payroll a snap. Payroll can be processed in a matter of just a few mouse clicks.
   
   
2. Save money
   
   Outsourcing will enable your company to focus on its core functions, thereby saving your company money. Outsource your payroll and you’ll most likely also experience a reduction in operations costs and conservation of capital.
   
   
3. Avoid payroll tax filing penalties
   
   Process your payroll with an established and reputable payroll service bureau and avoid the headaches of payroll tax penalties. Because payroll service bureaus have the payroll tax expertise and regularly updated systems, they have a low rate of payroll tax penalties.
   

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   Why Outsourcing works
   
   Outsourced payroll can be successful for companies of all sizes.
   
   An Internet-based payroll service for small businesses has been an important tool for the Teak Fellowship, a NYC-based program established in 1998. Prior to signing up for the payroll service in January 1999, Purandar Rao, an accountant providing services to the Teak Fellowship on a pro bono basis, processed the organization’s payroll through the payroll function in a popular accounting software.
   
   By outsourcing, Rao now had a "hassle free way to do payroll", and he was able to turn over tax filing and payment functions. He was also able to spend less time on payroll. "Payroll now takes 5-10 minutes every two weeks as compared to a couple of hours each payroll period. Also, no time is spent on tax filings as the payroll service takes care of it all."
   
   It also makes sense for larger companies to outsource payroll. The Briad Group, a 3,500-person hospitality company with several locations in New York City, began using a payroll service bureau in July 2001, moving from an old and unreliable DOS-based program. Seth Pollack, payroll manager for The Briad Group, chose his company’s service bureau after it was recommended to him by one of Briad Group’s business partners.
   
   According to Pollack, the most important facet is service. "The customer support team I work with is top notch,” he says. “They are always helpful and able to resolve all problems within a timely manner."

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