Managing payroll internally is something most small businesses just resign themselves to. Calculating time, figuring out taxes, issuing checks, and preparing reports are a fundamental part of any business, but is it necessary to do it in-house?
Small business owners are busy people. They have a hand in every aspect of the business, from the most menial tasks to the most important meetings. Doing your payroll is like adding 10 more jobs to your already overloaded work schedule, especially if you take care of retirement plans and direct deposits too.
Using a payroll service is an effective way to streamline these operations in your small business.
The benefits of payroll services for small businesses are wide and varied. This guide will walk you through them and help you decide if a payroll service is right for your small business.
Payroll Services – What They Do
A payroll service does so much more than cut checks. It handles child support and garnishment issues, keeps track of time off, deals with human resource and insurance information, and frees up valuable time for a business owner to concentrate on other pressing issues. It does all this, and more, for small businesses in a few different ways:
Tax Expertise
The IRS states that as many as 40% of small businesses pay late fees or fines for incorrect filings. Payroll services can handle the basics of tax reporting to help clients avoid fees and penalties and keep them worry-free from tax problems
Increase in Productivity
Outsourcing the payroll duties to a professional frees up valuable time. Inc Magazine says payroll is the number one small business task to outsource because of the massive chunk of time it consumes. Leverage the capabilities of a payroll service to alleviate the time-consuming chore of payroll and get busy on that to-do list.
Financial Reports
One of the most valuable things a payroll service can do for you is to provide various financial reports. There is always some need for financial documentation when running a small business. A payroll service can help you report payroll by department, earning statements, expense reports, and time sheet summaries whenever you need them.
You’ll wonder how you ever managed without a payroll service once you experience all they have to offer you. There is also a whole slew of advantages to enjoy once you find a payroll service to work with.
Advantages of Using a Payroll Service for Small Businesses
Payroll services perform different tasks for different businesses, so it can be challenging to pin down all the benefits they can deliver for you. You can expect the following from them, though, regardless of what duties you hire them to do:
1. Save Money
Payroll services save small businesses money. There are many avoidable mistakes an inexperienced HR person can make when handling payroll. Using a professional payroll service saves money by having less data entry and fewer mathematical mistakes that can cost a ton in fines and fees.
2. Guaranteed Compliance
Small business owners don’t have to worry about complying with government payroll laws when using a payroll service, because it will take care of all compliance issues and take responsibility for any errors. There’s also the issue of in-house compliance. Payroll services are small business experts who know the value of good communication with employees. They can make sure your business rules relating to payroll, withholding, and taxes are present in written form for all employees.
3. Beat Small-Business Challenges
Small businesses have a set of typical duties they all must master, and payroll is one of the most significant – but not all small businesses are alike. It takes some forethought and preparation to attack small business challenges so you can prevent them from becoming insurmountable. Using a payroll service makes it easier for small businesses to keep track of what they are paying out and what’s coming in, and they can provide thorough documentation if you ever need to apply for funding.
4. Increased Flexibility
We all noticed what happened to small businesses when the COVID-19 pandemic struck. Many had to close or quickly scale down their number of employees. Others made adjustments and need a few more employees. Flexibility is vital in small businesses because circumstances are fluid and can change instantaneously. Payroll services make adding or subtracting new employees a seamless experience that takes no time from you or your staff.
Circumstances vary greatly between all small businesses, so the services they find most helpful are all specific to them. What is extremely helpful to one may only be slightly useful to another. The good news is that payroll services are rewarding to small businesses, no matter what they need most. They aren’t without their negative points, however.
What to Look Out for When Using Payroll Services for a Small Business
Payroll services are undoubtedly valuable to a small business, but there can be a downside, depending on your specific circumstances. The offerings can be overwhelming and confusing, and it can feel like you’ve lost control of a portion of your business. Take a look at a few factors to be aware of before diving into the world of payroll services:
- More Than You Need
Payroll services are handy tools for small businesses, but that doesn’t mean you need every service they offer. Choose a payroll service that allows you to cater their offerings to your needs and doesn’t saddle you with a lot of stuff you have to pay for but won’t use.
- Security Issues
Every time you give a third-party access to your company information, there is a security risk, and using a payroll service is no exception. Make sure any payroll service you choose has measures in place to protect the data of your business and employees.
- Loss of Control
Small business owners can feel a loss of control if they are used to doing their payroll. Business owners can still view and access their employee’s payroll records, but it can be a difficult change if you’re used to being in control.
The disadvantages of payroll services are worth considering, but the benefits often outweigh them. Payroll services are easy to use and can make a difference in the bottom line of any company unsure of the intricacies of payroll.
An Expert Can Help With Small Business Payroll Tax Issues
A payroll service can help with many issues, but when tax questions arise, there is no substitute for having an experienced tax attorney to offer advice. Silver Tax Group is a team of tax lawyers and experts working with clients nationwide to lower their tax burden and respond to IRS communications.
Our goal is to provide comprehensive tax law information that people can understand and apply to their situation. Anyone with questions about payroll services or payroll tax issues can contact our offices today.
