Mastering Payroll for Small Business
Running a small business is no joke. We can relate. You're in charge of Sales, Marketing, Service Delivery, Customer Support, Growth, and everything else.
As the business grows and more people jump on board, you can focus on working 'on' the business than 'in' it. Despite that, there's still the issue of managing your employee's payroll.
Payroll processing is not just about issuing fortnightly or monthly deposits.
It's about ensuring accuracy, compliance, and timeliness.
Mistakes in payroll can lead to discontent among employees, and studies show that 49% of workers consider changing jobs after just two payroll errors.
So it's crucial you get payroll right so it does not cost you valuable employees, time, and money.
We'll explore the different payroll processing methods available to small business owners, weighing the pros and cons of each approach.
Small businesses have 3 options: the business owner does payroll in-house, hiring a CPA, or outsourcing payroll solutions. This guide will help you make an informed decision tailored to your business needs.
Option 1: Keeping Small Business Payroll In-House
Managing payroll internally means the business owner or someone hired to manage payroll will be in charge of the process. In-house payroll provides control, but it comes with complexities.
You must determine pay rates, calculate taxes, and withhold deductions. Furthermore, you must stay updated on fluctuating insurance rates, comply with any specific tax requirements, and handle direct deposit arrangements.
However, manual data entry is time-consuming and prone to errors, which can cost money through overpaying taxes.
One significant consideration is the time investment. Small business owners spend an average of 5 hours per pay run on payroll, equating to 21 days each year.
While this option may seem cost-effective initially, the potential for mistakes and the time commitment might not make it the most economical choice in the long run. When you hire someone internally, there's also the risk of that person disclosing pay information to other workers, if you'd prefer privacy.
Option 2: Hiring a CPA
Outsourcing payroll to an accountant who can provide expertise and peace of mind. Accountants handle necessary paperwork for Insurance, health surcharge deductions, and accurate tax filings.
However, this option can be expensive, and business owners may lose control over their financial activities. Accountants are great for larger businesses or those that have the additional capital to invest. Some also are part of larger consulting firms that can guarantee losses or errors, hence the high price tag.
If you ever decide to bring payroll back in-house, you'll need to start anew, refining your skills and implementing a new payroll system.
Option 3: Partnering With a BPO or Payroll Company
For small business owners looking to focus on their core operations, partnering with an established outsourcing or payroll company offers a hassle-free solution.
These providers usually have a proprietary software that handles payroll processing, tax filings, and compliance, and even maintain detailed employee records, reducing the risk of errors and penalties.
While there might be a perception that outsourcing to a payroll provider is costly, the benefits often outweigh the expenses. BPOs and payroll companies keep abreast of tax changes, ensuring your business remains compliant at all times.
Choosing a payroll partner that offers additional HR services, such as recruitment and selection, onboarding, and benefits administration, can provide comprehensive support.
As your company grows, having an outsourcing team that offers more than just payroll can save you significant administrative hours, allowing you to focus on your most valuable assets - growth and your employees.
Which One Should You Choose?
In summary, managing small business payroll is a multifaceted task that demands accuracy, compliance, and time.
While in-house processing offers control, the potential for errors and time investment makes it a challenging choice.
Hiring an accountant can provide expertise but comes at a significant cost and might lead to a loss of control.
Partnering with a BPO or payroll company can offer a comprehensive solution, freeing up your time to focus on growing your business. It's also significantly cheaper and automated, which allows you to rest easy thanks to predictable results.
Remember, the key to successful payroll management lies in making an informed decision that aligns with your business needs and resources.
By understanding the complexities and potential pitfalls, you can navigate the payroll landscape confidently, ensuring your employees are paid accurately and on time and your business remains tax compliant, which is essential for growth.
Ready to streamline your small business payroll process? Partner with CallServ, a BPO that understands your needs. Contact us to invest in accuracy, compliance, and peace of mind today.
Comentarios