Some business organizations still handle all payroll functions in-house. This is great for smaller corporations who have a workforce of 100 employees or less. However, once you get past that number and build your team past 100 employees, handling your company's own payroll needs can become cumbersome. You can actually save money by contracting out your payroll needs to an organization that specializes in handling payroll for other companies.
Manpower and Software
Gone are the days of tallying up the hours on old-fashioned time clock punch cards and then handwriting paychecks off these calculations. Calculating hours, taxes and other aspects of payroll is largely automated now, and there are many great payroll software programs that reduce the amount of time needed to run payroll every pay period. However, even with all of the technological advances in the payroll field, handling this area of daily operations still takes a lot of manpower. You can cut two to three employees from your payroll office and move them to other necessary functions just by contracting out payroll.
Files Storage and Security
Obviously, payroll records are very sensitive and should be very carefully protected. If you store these records electronically on your company servers, you must ensure that the records are properly secured and only people with appropriate clearance can access these records. If you keep paper files, you should keep them separate from other company files in a locked cabinet or vault. Paper files take up much-needed storage space in an office, which cuts down on space for other files. If you have these files stored off-site, you will have storage and security fees to pay. Contracting your payroll to a payroll service eliminates these issues and the associated costs.
Again, most payroll functions are now automated. However, payroll software programs are not inexpensive. The initial program must be purchased, as well as the appropriate licenses for each user of the software. These software programs are updated often when payroll laws and tax laws are updated. These updates have a fee associated with them, and if the updates are not obtained, employees can be underpaid, overpaid or have the wrong amount of tax taken out of their wages. When you contract out your payroll needs, you no longer have to purchase new software or pay fees for software updates for payroll processing.
It is important to cut operating expenses where possible, to increase your organization's profitability. Hiring a payroll processor to handle your payroll accounting needs will save time and money, and increase the efficiency of your corporation's daily operations.Share