How Can Payroll Services Save Time and Money for Businesses?

Business owners across the world often have no time to focus on the specifics of handling payroll processing work. Such owners prefer to outsource the task as they don’t have the expertise and the resources to evaluate overtime, compensate workers who are stationed across different states, or ensure payroll taxes are cleared and reported on time.

When a business outsources its payroll processing work to a payroll service partner, it gives them the freedom and time to put more effort into other assignments that come with managing a business. A payroll service partner often uses various tools to automate the whole payroll process, thereby making it precise and less time-consuming.

A payroll processing tool also handles, maintains, and automates employees’ wages. Today there are several cloud-based payroll software that hold employee data on a secure server that can be retrieved whenever needed. The software’s user-friendly character allows HR managers to make direct deposits and create payroll reports. A payroll processing partner can set up a powerful software solution to reduce the time and effort that HR managers must put in to submit timely reports.

Let us look at the various ways through which a payroll processing partner can save a business time and money.

Performing Accurate Payroll Processing 

Employers often make payroll errors while disbursing wages. For instance, categorizing employees wrongly as exempt or non-exempt, often results in more inaccuracies. Here are a few examples of the errors that trigger the miscategorization of an employee:

• Failing to pay appropriate workers’ compensation premiums
• Missing overtime wages leading to incorrect payment
• Failing to give employees the requisite benefits notices and statements
• Recording work time inaccurately
• Failing to make proper contributions to retirement plans
• Failing to file appropriate union and state tax documents

Other payroll instances where repeated inaccuracies are seen include holiday pay policies, determining overtime, certified payrolls, job costing, and managing payrolls with workers residing in different states. Teaming up with a payroll processing firm can help businesses get rid of the additional workforce to understand pay laws for different states, thereby saving precious time. Businesses also gain expertise in payroll management that would help them adhere to wage laws.

Establishing Discipline, Handling Expectations, and Preserving Accountability

While all businesses aspire to have a faultless and potent payroll management solution, achieving that is typically easier said than done. A payroll management firm can help a business wisely manage expectations on how payroll processing functions. Once the payroll laws and regulations are put in place and communicated appropriately, employers need to ensure the staff and management are liable for the process.

Getting the services of a payroll management firm restricts a business’s legal accountability. It is up to the payroll management firm to ensure that all labour and tax laws are observed correctly. A business that neglects the payroll process can find itself liable to be penalized.

Ensuring Tax Code and Employer Compliance

Business owners are often not aware of tax codes, particularly if they have branches in multiple states. Payroll specialists are up to date on changes in tax codes and can fix errors easily. With a conventional stand-alone payroll firm, software tools help businesses create their tax reports, but they are still obliged to file those reports and pay their taxes. However, a payroll processing firm manages tax reporting and filing on the company’s behalf and even undertakes accountability for accuracy.

Compliance functions in a two-fold manner. First, businesses must be compliant with all relevant laws, codes, standards, and regulations that include union, state, and local authorities. The business must comply with relevant safety and inspection standards, federal laws on harassment, and so on.

Second, a business must set guidelines and practices that all employees must comply with. The company may require safety regulations and other pertinent standards posted and circulated to employees. The company must have written policies on paid time off, drug and alcohol policy, and progressive discipline.

The consequences associated with tax code and other compliance violations can add up rapidly and put a business at risk for legal action. When a company partners with a payroll firm, these risks are much lower, allowing the business and its staff to focus on other important matters.

Paying Attention to Detail

With payroll processing, the tiniest details can make a big difference. Not paying attention to each detail can significantly impact the work of the payroll management team. Since payroll processing partners understand the nitty-gritty of all aspects of the job, they can help businesses reduce culpability and expand the payroll process to sustain business growth.

From accurate categorization of employees, understanding labour laws, and knowing tax regulations and exceptions, outsourcing the task of payroll processing make sure a company does not miss key details that keep them in compliance and free from any penalties.

This is particularly significant as work gradually shifts to the WFH model and employees take advantage of the new laws for paid sick days and family leave. For a beleaguered HR unit, it is challenging to keep track of the tiny details of the various laws in different states, but a payroll management firm often employs dedicated teams for this purpose.

Enabling Savings

Payroll processing firms provide businesses with the freedom to turn operating expenses into a variable cost structure. This is important during an economic downturn, as a business grows, so do service costs. 

A business will not have to keep a payroll clerk if the assignment doesn’t justify the fixed cost. Moreover, the business will not be charged for payroll software fees, training, office supplies, or equipment. A business will also obtain IT support, state-of-the-art hosting infrastructure, and software that they would have struggled to afford otherwise.

Over time, subcontracting the payroll process will become more affordable for businesses than taking it up themselves, particularly if other services are bundled with it. While finalizing a payroll management firm, businesses must find out about any added services fees upfront. 

Saving Time

When the HR team is not spending their time on handling payroll systems, the business can save time that can be expended on more crucial activities. Rather than spending hours on data entry, double-checking numbers, or studying legislature, HR professionals can better spend their time and resources on building strategy and other key activities that improve productivity and efficiency and augment the workforce to better meet customer needs and achieve business objectives at minimum cost.

By opting to outsource the work of payroll processing, a business will no longer need an entire staff to handle processes such as time-tracking, pay stubs, and benefits. Payroll processing firms offer huge benefits to growing businesses. The justification for obtaining the services of a payroll processing firm mentioned above will remove any hesitancy about bringing such systems into a firm, as they can help businesses save money.