Blog Post

Reasons Why Employers Outsource Payroll

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Payroll processing – It’s easy, right? Surprisingly, more than half (56 percent) of 300 small business owners reported in a recent survey that they administer payroll on their own. But payroll professionals know it’s anything but simple.

As a payroll service bureau, you know that payroll can be incredibly complex, encompassing everything from tracking employee hours to setting up benefit deductions to issuing W-2 forms and filing payroll tax forms and reports. And errors can mean not only unhappy employees but hefty non-compliance fines levied by state or federal entities. No wonder payroll is consistently ranked among the most hated tasks among office administrators, or that it’s among the top five outsourced tasks. Here are five reasons why:

 

  1. Approval delays: Paper-based payroll processing systems require managers to manually review and approve timesheets in plenty of time for checks to be processed and handed out on payday.
  2. Time-consuming manual data transfers: Even companies that use a mix of paper-based processes and some sort of payroll technology or online program regularly experience issues uploading payroll information, such as employees’ identifying data and information on their hours worked.
  3. Paper jams: In-house payroll systems often require companies to print paychecks on-site. And if you’ve ever experienced a printer paper jam, you know just how frustrating this task can be, particularly when time is short.
  4. Limited reporting capabilities: A fully-compliant payroll system calls for regular reports. Generating these reports can prove daunting without automated technology platforms.
  5. Increasingly complicated tax requirements: “In this world, nothing can be said to be certain, except death and taxes,” Benjamin Franklin reportedly wrote in a 1789 letter discussing the newly ratified US Constitution. Add to that sentiment the certainty that employ tax laws become ever more complicated with time. The burden is on the employer to make sure that all applicable local, state and federal taxes are withheld and that payment from those withholdings are remitted on time. A single missed payment can bring stiff penalties ranging between two and 15 percent.

 

If you’re a payroll services provider these five factors all play in your favor. Results of a recent survey reveal additional way that employers benefit from outsourcing their payroll:

  • 40% of respondents rank peace of mind about regulatory demands as the biggest benefit of outsourcing payroll;
  • That number jumps to 63 percent for businesses with 20 to 99 employees;
  • 29% said the expertise of dedicated payroll professionals was the primary benefit, particularly in smaller companies where fewer administrators  manage a wider range of tasks and may not have any payroll experience;
  • And 19 percent most appreciate the time saved by outsourcing payroll.

Another factor in a payroll service bureau’s favor: The ever-growing suite of next-generation payroll technology solutions offered by Apex HCM. Online payroll systems with role-based security and employee self-service features; a proprietary tax engine; real-time, standardized payroll reporting; cloud-based Affordable Care Act compliance tools; general ledger integration;  and debit card-based payment systems are just a few offerings that will set your payroll services bureau apart from competition when approaching new clients and upselling existing clients. Call 877-750-2739 or request a demo of any of our payroll products or services.