What to watch out for when outsourcing payroll
By BuildMyBiz on August 3rd, 2015
Small business payroll can be a complicated process for new entrepreneurs. Emerging companies already have so many concerns in today’s market, such as securing the financing necessary to operate and creating opportunities for brand exposure. However, technology has given business leaders a solution for at least some of their challenges.
Small business payroll software can help ease some of the burdens felt by owners, making time-consuming accounting processes much more streamlined and efficient. If employees aren’t familiar with the technology or there are not enough dedicated staff to handle the duties, organizations can even outsource the obligations to a third-party to more completely eliminate the concerns of handling payroll from daily operations.
Weighing the risks and benefits
Businesses shouldn’t simply choose an outsourcing partner without researching if they will satisfy a company’s needs. However, there are many advantages to letting a third-party handle payroll that may affect profits and the accuracy of financial records. For example:
- The time saved by eliminating payroll responsibilities can be critical to the success of a new enterprise, but leaders need to be careful who they release employees’ sensitive information to, according to Business News Daily.
- Choosing a reputable collaborator can help relieve some of the concerns arising from identity theft or tax fraud. Beyond the private data of staff, business leaders may also expose details about their companies. In a world where cybercriminals target even the most modest establishments, owners can never be too careful.
By verifying the credentials of third-party payroll services, businesses can ensure they are insured, bonded and have a method to monitor payroll deliveries to certify money is flowing in the right directions, added the source. Developing a relationship with these service providers can help in alleviating anxieties.
Tips for working well with the IRS
Anytime money is involved, business leaders need to pay close attention to every detail. One small mistake could be disastrous for an organization, which makes support from financial experts or automated programs ideal for reducing these risks.
However, even when a company outsources its payroll duties, owners still need to be vigilant. There are many areas that can cause problems with the IRS or even a group’s employees if a form was filled out incorrectly or a bill was sent to the wrong location.
Organizations that use a third-party should refrain from changing the address of the employer to that of the payroll service, despite them being allowed to. This is helpful in potentially preventing confusion stemming from missing letters. Groups also have a method to monitor where their money is heading and can notice discrepancies more quickly.
If something is off with the finances and payroll being handled by another party, companies should notify the IRS immediately to get to the root of the problem as quickly as possible. This can help leaders avoid any unnecessary penalties or fines and keep the brand’s reputation strong.
Businesses are still liable for any payments to the government that are missed for whatever reason, regardless of who was supposed to deliver them. This demands the complete attention of owners to avoid as much damage as possible and prevent any setbacks that would hinder the progress of their endeavors.
With so many tasks to handle already, any way to responsibly reduce an entrepreneur’s responsibilities could make a substantial difference for organizations, especially those with limited manpower and resources. Outsourcing payroll services not only strengthens the accuracy of important financial records, but helps put emerging businesses on a level playing field with their larger counterparts.
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