Business management comes with many roles that demand different shares of the available resources. It can be, particularly difficult for owners of small or medium enterprises who don’t have the capital to afford all the required help. With the extensive list of tasks that need your attention, some things can easily slip through the cracks. Outsourcing becomes one of the best solutions for such business owners. Corporate payroll services are some of the roles that SMBs outsource to other companies. Managing the payroll is one of the greatest financial responsibilities for a business.
Large corporations have the means to hire the finance professionals, payroll, software, and other management tools. On the other hand, small and medium businesses are left to spend money on corporate payroll services. With the right people handling your employee payroll needs, your enterprise gets the opportunity to compete on level ground with established businesses. The kind of payroll services your company needs depends on several elements, including the size of the workforce and type of business.
What Are Corporate Payroll Services?
Third party providers offer corporate payroll services for companies that don’t have the capital to fulfill the tasks in-house. Payroll management is not just about depositing money into an employee’s account at the end of the month. For one, compliance issues are involved. Businesses must adhere to various tax regulations when paying their workers. For this reason, the person responsible for the payroll must know the latest rules.
Then, there is the financial reporting aspect of payroll management. Companies need financial reports to gauge the performance and health of an entity. Poor management of your payroll can lead to penalties such as fines and may cost your business its reputation. With corporate payroll services, you can minimize the risk of such mistakes.
Who Needs Corporate Payroll Services the Most
Every business that has employees, no matter the number, should have payroll management. Third party services are suitable for small and medium companies that don’t have enough resources to dedicate to an in-house team. For a business with limited employees, it’s not practical to hire a full-time financial expert to deal with the payroll responsibilities.
Paying a third party makes more sense because it gives the workers a chance to work on growing the business rather than keep up with payroll issues. Payroll services should be part of the budget for any organization that wants to improve the accountability of its administration.
How Much is Usually Spent on Corporate Payroll Services
The cost of corporate payroll services ranges on a wide scale, depending on the industry and size of a company.
- Some businesses such as retail stores will dedicate more to their inventory than wages. This means that the expenses for payroll management are not very high.
- In other fields such as the service industry, companies can spend up to 50% of their overhead on the payroll. This requires them to invest a considerable amount on its management.
- SCORE released a study in 2015 that looked at the hours and cash that small businesses spend on the administration of taxes, bookkeeping, and legal fees, among other functions. Some companies spent 80 hours in a year on payroll management. 23% of the interviewed businesses spent $1,000 or less annually. Meanwhile, 16% of them had a budget of up to $20,000 a year for their payroll services.
- Another report indicates that companies that outsource their corporate payroll services spend 18% less than those that undertake the functions in-house. The TCO for outsourced services is much lower because a company doesn’t have to deal with the expenses of installing accounting software, upgrading hardware, maintenance, and direct labor costs that are associated with managing the payroll yourself.
5 Corporate Payroll Services to Reduce Your Spendings
1. A Focus on Management
Picking the right corporate payroll service company is less challenging when you know what your enterprise needs. Which services will satisfy the bottom-line? For one, find a provider that offers regulatory management. Payroll rules and compliance standards change all the time. So, companies that don’t follow them can end up with various legal troubles.
Payroll service providers have professionals who are experts in tax regulation. This means that they ensure your business stays in the clear at all time.
2. New Hire Reporting
This is another service that you should look for when hiring your payroll management company. Businesses have to comply with federal and state HR regulations when getting new employees.
However, keeping up with every new hire and reporting to the government can be a bit hard, especially when managing a young business that has so many requirements.
3. Time Management
It is another one of the corporate payroll services that you should consider for your business. An enterprise with more than 20 employees will not have an easy time tracking vacations time, sick hours, and overtime for everyone.
Your payroll company can handle such time management aspects, which increases your productivity.
4. Payroll Processing
This is one of the must-haves when outsourcing payroll services. The management firm should be capable of dealing with the Social Security deductions, retirement benefits, and other elements that influence monthly wages.
Payroll processing functions ensure that every worker gets his/her paycheck on time. This service will also help with the management of both your full-time and freelance workers accordingly.
5. Payroll Reports
These are critical services when hiring a management company. Most software has this function already integrated. When deciding which corporate payroll services to splurge on, consider the value that reporting has on your business. When you have multiple departments, drafting and finalizing the payroll reports for each one can take considerable time.
Payroll companies use integrated systems that generate these reports automatically. Financial reporting is essential to your record keeping hence its usefulness.
Payroll management is a core function for all businesses, but not every entity has the budget to employ an in-house team. Outsourcing corporate payroll services has been an effective solution for many business owners. All the responsibilities that come with running a business may not leave enough time to attend to your payroll needs adequately. With a third party handling those functions, you can plan your business growth without worrying about HR compliance issues or timely retirement deductions.
However, analyze the needs of your enterprise first before hiring a payroll management company. Know which services you can do without and the ones that are worth every expense.
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