Business

Is it Necessary to Hire a Payroll Outsourcing Provider?

payroll outsourcing

Many small businesses are opting for outsourcing their payroll to save time and money. While this is a great idea, some do not understand the benefits of hiring an outside provider. Certainly, there are questions to ask when considering a payroll solution, but this blog post explains why companies should also think about how they will manage their business in the long term.

Improves employer-employee relations:

When most of these companies consider outsourcing their payroll, they believe it will strengthen employer-employee relations. While that may be true at times, there are many other factors that play into employee satisfaction. The hiring process is vital and should not be overlooked in the decision-making process. When a company has a clear idea of how they want to hire employees and keep them compliant with the law, employees will be happy to help them reach their bottom-line goals.

When most of these companies consider outsourcing their payroll, they believe it will strengthen employer-employee relations. While that may be true at times, there are many other factors that play into employee satisfaction.

Saves both time and money:

Although Payroll outsourcing and benefits administration may seem like a good idea, companies should also consider how much time it will save them and how much it will cost them. Most companies believe that outsourcing their payroll will save them money. In some cases, this is true; however there are a lot of other costs that they need to consider. For example, hiring an outside provider could get expensive and the company may not be able to afford it in the long run.

Complying with regulations reduces hassles:

Business owners may not realize that their company will be responsible to comply with a variety of government regulations. In some cases, companies have been shut down due to the fact that they failed to comply with certain laws. For example, if a company does not comply with the Affordable Care Act, it could face severe financial penalties. When outsourcing payroll, companies will feel less stress about these types of hassles because they can focus on other solutions that will actually make an impact on their bottom line.
As mentioned above, there are many factors that companies need to consider when deciding whether or not they should outsource their payroll and benefits administration.

Factors such as DEA, AEO, and DBS include:

  • Employee visa processing
  • Work authorization
  • Social Security number verification
  • Payroll tax processing
  • W-4 properly created and completed for each employee. Certain positions require more time for certain types of customization and more time is required for certain visa types.

Methods:  There are different methods of payrolling that the employer can choose from along with different ways to outsource processing.

Among these are:

  1. Full service outsourcing where the company provides the payroll services. The employer still has to pay the payroll expenses, but they don’t have to do anything else, while a cash or lump sum benefit payment payments are received directly by the hired provider.
  2. Do-it-yourself outsourcing where the employer outsources the payroll processing, but does not move towards full-service outsourcing and third party payroll providers will obtain the necessary information directly from employees.
  3. Dedicated services are obtained by employers who want direct access to services and who will be in charge of handling employee requests themselves.
    Employee Visa:  The company charges a fee that varies depending on the type of visa they have obtained.

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