Payroll processing can be a complex and time-consuming task.
Imagine spending hours every day handling employee compensations, tax filing, attendance and time-tracking knowing they can easily be automated and outsourced.
It’s a red flag when your main focus is not on your core business operations and strategies and a clear indicator that it’s time to look for affordable payroll services.
Ideally, a payroll processing solution should be comprehensive, handling both your payroll and HR responsibilities, while keeping it simple and easy.
And most importantly, it shouldn’t cost you a leg.
Let’s explore how you can choose the right payroll service for your business.
Key Takeaways
- 61% of businesses outsource payroll processing, creating operational efficiency.
- An affordable payroll service handles your tax filing and employee compensation along with several administrative tasks.
- Outsource your payroll management to a service that understands your business needs.
- Payroll management services help you automate payments, save money, and increase data consistency with third-party integrations.
Payroll services and their impact on businesses
Let’s explore payroll services, look into some data, and then understand how they make your business operations more efficient.
Payroll services essentially help your business run your payroll without any complications.
It is responsible for handling payroll, making deductions, and filing taxes.
Most payroll services offer a combination of HR and payroll services.
This means that not only do they take care of your payroll and taxes, but they also look into your daily administrative tasks.
This can be a huge relief considering businesses spend 120 hours on payroll responsibilities every year.
By choosing to outsource, you have dedicated resources covering the following responsibilities.
- Prepare and file your taxes
- Make deductions and keep your financial records organized
- Ensure that your employees get paid accurately and on time
- Track employee attendance and time
- Handle additional compensations, like life and health insurance
- Support employee recruitment and onboarding process
- Create an employee dashboard, storing all relevant employee data for improved employee management
Businesses should pay special attention to their payroll system as these mistakes reduce your chances of retaining a good employee.
- 49% of employees consider a new job offer after two payroll mistakes.
- 33% of businesses make payroll mistakes every year, costing them billions of dollars.
- One in three organizations gets penalized for payroll errors.
- Manual data entry is behind 40% of the payroll errors.
Hiring a payroll service can change the way your business operates.
It automates the entire payroll process and simplifies day-to-day tasks, helping you save time and money.
You can be confident your data is accurate, up-to-date, and filed correctly.
Why should you outsource payroll services for your business?
61% of businesses outsource payroll services to optimize their workflow and establish data accuracy.
Let’s look into the 4 main benefits of outsourcing payroll services
1. Automated payments
Automation is the primary goal for businesses choosing to outsource their payroll management.
Businesses with automated payroll processing are 33% more effective with timely payments.
A payroll processing service logs your employee data, their hourly pay, and time into a solidified system. This system automatically estimates their paycheck for you.
All of this is done keeping their retirement benefits, child support, and other withholdings into consideration.
You can choose the payroll frequency, whether you’d like it to be weekly or bi-weekly.
This categorization serves a huge advantage, reducing error, saving time, and increasing efficiency.
2. Cost saving
The world is embracing automation and it’s time you do that too.
Through automation, businesses have seen an 80% reduction in payroll processing costs, so its impact is not restricted to business efficiency.
A payroll service supports HR responsibilities, giving you a two-in-one solution.
And what that does is it reduces your overall business costs.
It reduces HR investment as you have software handling most administrative tasks for which you’d have to hire a dedicated resource.
And when you think about it, small businesses don’t have the resources to hire payroll specialists nor they can afford to invest in a payroll software program.
Outsourcing payroll management becomes the most affordable solution.
3. Third-party integrations
Most payroll services allow you to choose from their range of third-party apps to improve your business operations.
You can opt for NetSuite integrations to increase productivity and reduce manual input.
For example, integrating NetSuite with QuickBooks Online is a great way to manage your financials along with payroll processing and other administrative tasks.
It will help you store all financial data in one place, eliminating data inconsistencies.
Businesses with payroll software decrease errors by 31%.
4. Cloud storage facility
62% of businesses adopted cloud-based payroll solutions by 2021.
You may question the role of cloud systems, emphasizing the importance of on-premise systems, but the world is changing quite rapidly, and one of those changes is the implementation of cloud models.
This is extremely necessary at a time when remote working conditions are becoming the norm.
Cloud software solutions give you the flexibility to work from anywhere without compromising the security of your data.
You can review, change, or process payment as you go.
Your geographical location and working mode are never a hindrance to your work.
5 key considerations to choose the right payroll service for your business
Now that you understand how outsourcing payroll management can positively influence your business, let’s explore 5 ways to ensure it stays affordable and within your budget.
1. Evaluate your business size
If you want to find the best payroll service for your business, you have to start by analyzing your business.
- What is your business size?
- How many employees do you have?
- How do you pay your employees?
- Where is your business located?
With so many options available, you have to look into your business specifics to figure out the best payroll service that fits your needs.
You have to understand that a payroll service that suits a business of 100 employees will not necessarily be a fit for a business with more than 1000 employees and vice versa.
Of course not only would it increase your cost, but it will also offer features that you don’t really need at the moment.
Also, consider the location of your business. I
f you have remote employees working from different states, the laws would change and your taxes would get complicated.
Add international payroll into the mix and you have a puzzle to solve, my friend.
2. Decide your budget
Your budget plays the most important role in determining the best payroll service provider for your business.
An additional aspect is the frequency and type of service charges. So, you have payroll services that charge per month while others charge per solution.
If you’re looking for an affordable solution, the best thing you can do is look for a payroll service provider that offers an annual subscription.
Although, be careful as some services sneakily add extra charges at the year’s end for preparing and filing tax returns.
At the end of the day, before even looking for options, you must decide your budget. The more employees you have, the higher the cost would be.
3. List down the features you want
I mentioned how it is important for you to know your business before you look for payroll services.
Now, understanding your business isn’t limited to its size and location. You should also know your needs.
- What problems are you currently facing?
- What are your current and future goals?
When you know your business needs, the process of finding the right payroll service becomes simple.
Imagine you are a business with salaried and hourly employees. Now, regular payroll software might work for you just fine.
But when you have commission-based employees working for you, you’ll need a system with specific features that can handle this calculation.
Here is the list of functions that businesses usually expect from a payroll processing service.
- Automatic payroll processing
- Direct salary deposits
- Tax preparation and tax filing
- Employee attendance and time tracking
- Employee portal or dashboard
- Monthly, quarterly, and annual reports and analytics
- Online payment solutions
- International payment solution
- Health and other benefits
4. Ensure compliance and security measures
Tax preparation and filing tax returns is an important part of payroll management.
Always look for a payroll service that keeps your business tax-compliant.
There are local, federal, and state tax regulations that require attention to detail and accurate filing.
Another factor is the measures taken to keep your data secure.
Yes, cloud storage has become a necessity but do keep data backups for added security and minimal risks.
A service that meets these two demands will only add to your operational efficiency.
5. Discuss working method
We touched base with services that charge per month and per feature.
Taking that conversation forward, make sure you outsource your payroll services to a provider that understands your business well.
They should understand your industry requirements. For example, e-commerce businesses handle vendors, customers, in-house employees, and investors. This may not be the case for an IT company.
Also, the working mode is also important to consider here.
Ask yourself if want to outsource your payroll management or if you rather prefer an in-house payroll solution.
The Bottom Line
Payroll management is a time-consuming process that requires attention to detail.
If you start handling this process all by yourself, you’d have less time strategizing and focusing on core business activities – a risky step should you plan to scale.
Finding affordable payroll services is the best decision as you get comprehensive payroll and HR solutions.
Not only will you benefit by automating day-to-day business processes, but you will also reduce data inaccuracy, third-party integrations, and cloud facilities.
All you have to do is find a service provider that aligns with your business needs.
Ledger Labs offers payroll and tax reconciliation support along with other financial services to businesses across industries.
We have 12+ experience, helping businesses of every size with advanced tools and analytics.
Book a consultation today to discuss this in detail.
