Thinking About Outsourcing Your Payroll?

The trend to outsource payroll is definitely on the rise.

The return on investment, if done correctly, will include higher efficiency, re-engineered processes, lower costs, and less time spent managing the process. This should leave you with a leaner organization that will allow you to focus on growing your business.

There are several areas to consider when making this transition.

Price.   A cheaper price may cover basic services but then may charge for each deduction, call, email, click or quarterly returns.  As with everything else, you get what you pay for and if it sounds too good to be true, it usually is.

Understanding services needed.  Be sure to properly define the services that you will be receiving to make sure that you get what you pay for and are not paying for something that you do not require.  Are you looking for timekeeping, HR services, tracking vacation etc.

Experience. Hiring a local CPA firm may gain you well-trained accountants but this will only benefit you if they have expertise in managing payroll processing. Many CPA firms focus on the bigger picture in accounting vs all the parts that make up the end result.

Do your homework.  Be sure to evaluate the current cost of processing your payroll. This includes salaries, benefits, payroll taxes for staff along with the overhead cost for running the department. How much time does your staff spend on answering questions from the employees?  Are you utilizing the latest technology?  Is the data secure and backed up properly?  Do you have multiple employees able to run the payroll in the event someone is out sick?  How much do you spend updating your payroll software each year?

Security and Confidentiality.  A big plus for outsourcing payroll is keeping things confidential such as rates of pay, bonuses and other benefits.  There is nothing more detrimental to staff morale than having rates of pay disclosed to employees receiving less pay.

Ask for References.  Any firm that is in the business of processing payroll should be able to provide multiple references for you to contact and find out if the provider is a good match for you and your company.