Why Outsourcing Payroll Makes Sense for Small Businesses

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Outsourcing payroll is the practise of employing an external, specialist company, like Gilmour Co, to handle all your business’s functions related to payroll; including calculation of wages, taxes, keeping accurate records, adjusting for inflation, bonuses, holiday pay etc. Many small businesses have found that outsourcing their payroll operations to external companies can offer numerous benefits.

Time Saving
For small businesses that take responsibility for all the diverse and time-consuming tasks involved with payroll, they may be losing staff hours that could be better employed elsewhere. With the outsourcing of payroll, employees are free to focus on higher priority tasks, such as generating increased revenue, improving customer service or refining business strategy. For fledgling companies, where expansion is key, outsourcing payroll can be a valuable strategy.
Cost Effective

Contrary to perception, outsourcing can now actually be a cheaper solution than managing payroll internally, or employing a part-time accountant. When the hours spent on payroll, as well time diverted from other revenue generating tasks, are accounted for, businesses are often surprised at how much it costs to manage payroll. There are many reputable and established payroll companies that can offer very competitive rates, due to high levels of experience and specialisation. They usually provide a choice of packages that will suit different size businesses, ensuring costs are affordable and within budget.
Avoid Tax Penalties
A large percentage of small businesses, especially those that are relatively new and inexperienced, are subject to hefty penalties due to incorrect tax payments, revenue declarations etc. It is becoming increasingly complicated to accurately calculate all the different taxes and charges a small company is liable for. Outsourced payroll providers are constantly updating their procedures to comply with the current tax laws and legislation. They can guarantee that no fines or penalties will be incurred; not only relieving the monetary loss, but also the stress and worry of ensuring your company is legal. By outsourcing, your business can apportion all the risk of incorrect tax calculations to the external payroll company. This prevents small businesses being labeled as tax-avoiders are cheats, leaving the reputation of the brand and company name in tact.
No Need For Upgrading
Payroll software, and the hardware needed to operate it, is upgraded regularly. For a small business to stay up to date with the latest versions can be costly. If an out-dated tax table is used for instance, fines can be incurred. This results in further bother and time spent for employees to keep up. If payroll is outsourced, the external company takes responsibility for all upgrades, and will always used the latest software and technology.
Security
With the threat of hacking and cyber-fraud growing every year, security of sensitive employee information is a serious concern. When payroll is outsourced, all details are held in securely off-site. The latest Antivirus software and firewalls are constantly updated and utilised to stay ahead of the hackers, and provide the utmost protection for all clients. Back up systems and advanced password encryption give the best possible security of your employees private details. For a small business, attempting to emulate the same level of security internally would incur considerable and ongoing costs.
About the author
Leslie writes for payrollservices.me.uk and other accounting websites.  



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