The ABC’s of Outsourcing Your Company’s Payroll Compliance – Get ahead of the Government

September 5, 2017

Managing payroll and payroll tax payments for employees is critical to the success of your business, especially in a business that is under close scrutiny by the government. Payroll mistakes can result in dissatisfied and demoralized employees, potentially depressing engagement and productivity while increasing staff turnover. Errors can also result in costly penalties and fines levied by the Internal Revenue Service and State authorities.

Unfortunately, as important as an accurate payroll is to your business, it’s also among the most difficult and time-consuming functions to handle accurately. As Mario Apruzzese, CPA and Owner of Employees Only, a Michigan based HR Consulting firm, explains,

“There are so many rules for a small business owner to stay on top of, in fact once they get to 20 employees, they need to meet as many rules of employment as General Motors.”

Companies are increasing productivity—and revenues—by moving to outsourced payroll and HR services. Apruzzese notes the A.B.C’s of outsourcing your payroll:

A. You’ll Have Assistance with Government Compliance and can Focus on your business at hand

Accurately handling payroll in-house is time consuming, and accuracy is important. The more your business grows, increasing the size of your workforce, the more time consuming payroll becomes  Since 2013,  the Internal Revenue Service issues about 6.8 million penalties totaling more than $4.5 billion to businesses for errors related to employment taxes alone each year. Taxes are just one of the several functions related to payroll. You also need to be accurate reporting employee classification, overtime payments, state unemployment taxes, and garnishes and levies.

Any errors created by your in-house payroll staff are subject to hefty government fines. The fact that those mistakes weren’t intentional isn’t a defense—if your business or staff creates the errors; the business owner is responsible, legally and financially.

Companies whose sole focus is managing payroll and human resources have special expertise, including a thorough understanding of tax law. Unlike you or your payroll staff, they are far more likely than your in-house staff to ensure you remain in compliance with all of those regulations.

B. You’ll Reduce Costs and Increase Confidentiality and Security

Businesses which believe they’re saving money by handling payroll in-house can be very wrong, the truth is that time is money and, as noted above, preparing payroll takes a lot of time. You can test this yourself—simply add up all the time your company spends calculating employee hours, deductions, paid time off, sick leave and taxes, plus printing, signing and distributing paychecks and generating payroll reports. Now multiply those hours by the hourly wage you pay in-house payroll preparers and compare it to the cost of outsourcing. Chances are you’ll be surprised at how much you can save by letting a third-party handle payroll for you.

There are both internal and external threats to the security of your payroll data. Internal threats include employees who, with access to employees’ personal data, can engage in identify theft or otherwise tamper with records for personal gain. External threats are even more insidious: any security flaw opens the door to hackers who can steal your data for criminal purposes.

When you outsource payroll, your data is stored on highly-secure servers that employ state-of-the-art encryption technology and redundant backups. Matching that level of security in-house is generally too expensive for most businesses.

C.  You’ll Have Access to Other, Specialized Services

Many HR outsourcing, or PEO, organizations are able to offer payroll services on top of a variety of other solutions, like workers’ compensation, 401(k), health benefits and human resources support. In order to meet the specific needs of your business, organizations such as Employees Only, allow you to pick and choose from many of these other, specialized services.

An increasing number of smart Michigan businesses have either already outsourced their payroll services, or are actively considering doing so in the near future. No solution is right for every business, but for the vast majority, outsourcing payroll just makes sense—it can save you money, put the focus back onto what your business is all about, ensure compliance with government regulations, secure your data, and provide access to other services to help you grow your business and increase the bottom line.

Want to learn more about how Employees Only and our Team of HR experts can help with your Outsourced Payroll and Compliance needs?  Contact Us Today!