As a business owner, you want to stay on top of operations. However, running a business is hard work, and certain aspects like payroll can be time-consuming and tedious to take on yourself. Fortunately, it can now be outsourced to a third-party provider. Here’s a closer look at how this process works and why it’s beneficial. 

Why Outsource Your Payroll

There are several reasons to outsource these services, even if your company is just starting up or on the smaller side.

• Efficiency: Payroll processing companies are well-versed with tax laws, updated regulations, and requirements. Their knowledge and expertise allow them to get the job done faster and more efficiently.

• Accuracy: They file taxes, pay bills, and prepare forms such as W-2s. Since any inaccuracies or errors result in hefty monetary penalties, they are extremely detail-oriented when checking their work.    

• Expenses: Sometimes, a specialized in-house processor will cost your business more in terms of salary and overhead expenses. Outsourcing payroll service won’t cut through profits as much as hiring another employee will.

• Time: Instead of going over the details of hours worked, employee turnovers, and comprehensive reports, your time as the head of the company may be better spent on client acquisition and management. Let a third-party service provider handle tasks that won’t generate revenue so you can focus more on growing the business.

How It Works

A payroll service company has the primary functions of calculating the employees’ net pay, compiling accounting records, and preparing tax returns on behalf of the employer. Beyond this, some outsourcing companies offer a more comprehensive set of services and fall into other classifications. Payroll companies who identify as reporting agents or professional employer organizations can file tax returns for the employers.

On top of issuing paychecks, some third-party companies offer services like direct deposit, envelope stuffing, and automatic check signatures. They can issue W-2 forms, which are used to verify an employees’ gross earnings and taxes withheld. Other service providers can allow employees to assign automatic deductions from their pay or offer HR management applications for better monitoring of benefits and payroll data.

Before working with one of these companies, perform due diligence. Ask for references, experience, and credentials. You want to outsource your payroll to a reliable, bonded company.

Want to know more about outsourcing your payroll? Ask the experts at Balanced Bookkeeping & Tax Services. Helping numerous entrepreneurs across Lincoln, NE, they provide exceptional financial services, such as accounting, bookkeeping, and tax planning. Learn more about their areas of expertise online, or call (402) 466-4272 to discuss your financial needs with a friendly representative.