Human Resources Blog

As soon as you acquire your first employee, you are in charge of managing, calculating, and executing payroll. Because this is a very complicated process, business owners everywhere have been outsourcing their payroll to a third-party provider. However, this decision is not right for all businesses, which is why we’ve constructed this article to break down how exactly to determine if payroll outsourcing is right for your small business.

Analyzing Cost

Outsourcing your payroll is a financial investment, and it’s critical to weigh this factor against the time and money you’d spend managing payroll on your own. Errors from manually doing payroll can cost you tons of time and money, and this should be factored into your cost as well. For example, improper filing or calculating of taxes can land you with hefty fines or penalties. In fact, 40% of small business owners must pay at least $845 annually in IRS penalties. 

Outsourcing your payroll to a Professional Employer Organization (PEO) that offers payroll software can help you avoid paying more than you owe, ensure that you file your taxes on time, and that you’re reporting the proper amount of taxes.

When you choose a reputable payroll provider like Delta Administrative Services, the costs will be very straightforward. We will clearly state the monthly costs up front so that you can plan accordingly, as well as offer various add-ons so that you only pay for services that are relevant to your business.

Weighing Cost vs Risk

There are endless factors involved in your decision to outsource your payroll. While you may feel like you can’t afford to take on the added cost of paying a third party to manage your payroll, you must also consider the extreme risk that you’re exposed to when you attempt to take on payroll services yourself.

Studies have shown that each week, small business owners who don’t outsource their HR typically spend around 11 hours processing payroll, nearly 2 hours managing time off, and almost 5 hours managing employee benefits. By outsourcing your HR to a PEO, you can use these 18 hours per week to get back to doing what you do best–running your company. This is nearly half of the work week that you can get back and put into generating more revenue. 

Consider the Complexity of Your Business

These days, business owners everywhere are taking on the blended workforce approach, which has greatly affected the way payroll is processed. As your company grows and becomes more complex (e.g., paying employees overtime or hiring freelancers), the risk of error when manually processing payroll increases. 

A good payroll software will allow you to manage several different classifications of workers, including non-exempt and exempt employees, independent contractors, part-time employees, and full-time employees. This software will also allow you to abide by local, federal, and state regulations surrounding tax filing and overtime pay requirements. 

In today’s regulatory environment, employment situations and tax laws are incredibly diverse. When you’re looking for the right payroll provider for your company, it’s important that you look for a PEO that specializes in small to medium-sized businesses. If you’re anticipating major growth within your company, make sure that the software will scale with your company. 

At Delta Administrative Services, we believe that payroll issues shouldn’t keep you from running your business. Let us take on your payroll, HR, employee benefits, risk management, and more so you can get back to doing what you do best. Schedule a call with us today to learn more about all of the benefits that come with outsourcing your payroll.