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Do Any of These Scenarios Describe Your Payroll Situation?

by Brad Johnson on March 4, 2020
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business woman who is researching and taking notes

It’s tax time, you probably have a payroll cycle ending soon, and don’t forget those redesigned W-4s you’re getting questions about. While you’re at it, have you noted any state or local minimum wage changes for this year? If you’re lucky, you have it all under control, but if not, don’t worry. You’re not alone.

We’ve talked about the advantages of outsourcing payroll and HR support and how easy it is to get started or switch providers. Let’s look at outsourcing from the perspective of a business owner. Do any of these sound familiar?

1. You’re not a tax or payroll professional but you play that role anyway.

If you’re like most small or medium business owners, your business reflects your expertise and passion for the work you love. Odds are you’re not a payroll or tax expert though. It takes time and attention to become familiar with wage and hour laws and payroll tax procedures at the federal, state, and local levels. But the time available for compliance is limited because you also have to worry about payroll since your employees expect an accurate paycheck each pay period.

In addition, critical tasks like preparing year-end W-2s and 1099s and distributing ACA-required 1095s take time and aren’t always straightforward. Has your January ever been a stress fest due to year's end employee tax paperwork?

If any of this has you nodding and saying, “never again,” it might be time to consider outsourcing.

2. You’ve made some mistakes in the past and don’t want to repeat them (or make new ones).

As a business owner, you don’t know what you don’t know. And payroll and benefits are NOT the place to make errors. Consider this scenario: an unemployment tax was not paid and you receive a pretty scary letter from the state, alerting you to that fact. Worse yet, your in-house payroll person didn’t warn you it was coming. Maybe they didn’t even realize there was an error. You could be facing penalties and additional paperwork about a situation that might have been avoided with a little more expertise and attention.

jigsaw puzzle piecesEmployees will also notice quickly if you make mistakes with their paycheck or tax information. From overtime pay to bonuses to minimum wage increases, it can feel like a jigsaw puzzle each pay period.  

Reporting by Business2Community.com says, “33% of employers make payroll errors costing billions of dollars annually, according to the IRS. The American Payroll Association shows an error rate of between 1-8% of total payroll in companies that use traditional timecards, and roughly 40% of small businesses incur an average of $845 a year in IRS penalties as a result of mismanaged payroll processes.” Those are definitely statistics you want to avoid!

3. The large payroll provider you worked with was impersonal and didn’t understand your company.

Maybe you took the plunge into outsourcing with a large payroll provider, or have in the past. And maybe things worked well for basic payroll. But what if your business grows and needs more help with things like onboarding or HR? Your provider can probably put together a package for you but is it priced for a small business? And if it includes services you don’t need, can you negotiate or select only what you want?

Cash flow and economizing are usually top priorities for small businesses, so you’ll want to look for a payroll provider with affordable options that can be customized to meet your unique needs. A provider willing to communicate and work with you may even be able to help you save on payroll costs and afford additional services like onboarding or HR support.

Having a dedicated payroll representative, someone who always works on your account and gets to know you and the nuances of your payroll is another benefit to working with a provider that specializes in small and medium-sized companies. Can you call your large-scale payroll provider and get the same person each time? If you leave a message, is it returned promptly?

4. You struggle to stay up to date on tax, wage, and technology changes.

As we said at the beginning, staying in compliance with local, state, and federal laws is a big, complex job. According to research from Goldman Sachs, “85% of small business owners are personally responsible for ensuring their business complies with local, state, and federal requirements and stated that they find the process of learning all the various requirements affecting their business at the local, state and federal level challenging.” Outsourcing can bring the peace of mind that comes with knowing you’re in competent hands and don’t have to deal with compliance alone. Ideally, your provider will serve as a source of up-to-date tax and HR law information too, so you can take a step back from day-to-day payroll and HR tasks without falling out of the loop on important changes and topics.

And just like you need to keep up with new versions of existing software and find new online tools for your company’s core work, vendors roll out new payroll and HR software all the time too. How do you know which is right for your needs and which is secure? Cloud-based services like onboarding, time and attendance, scheduling, and more are all things you need but probably don’t have time to research in detail. An experienced payroll provider can help.

Find a Partner Who Looks Out for You

By now, outsourcing might start to look like a good way to offload some critical tasks to an expert and gain more time to focus on your business. But remember, anyone can hire a payroll provider, but it takes a true partner to build a successful relationship. Shop around and hire a partner who will keep your best interests in mind.

Horizon’s services and expertise might be just what you’re looking for – let’s talk!

Topics: Payroll, Hiring, General