Payroll Outsourcing Your Business and the Economies of Scale

What tools are your staff equipped with to manage payroll?

Many new businesses, starting with one person, a couple, or with a partner first feel that, as they add the first one or two people, payroll is something that can be handled. Very quickly, though, problems can arise and it becomes necessary to seek a better way. Outsourcing your payroll tasks, on some level, seems to be a prudent move.

If you handle your payroll internally, you must be staffed and trained to do the following, as it involves a lot more than just calculating the time and writing the checks.

Can you make the calculations and be certain of their accuracy?

Are you prepared to handle payroll, deductions, and benefits for your full staff?

Do you understand the details and obligations of payroll taxes?

Can you do so and have accurate, problem-free checks ready on time?

Often, small businesses will get in trouble simply because they failed to verbalize and examine these basic questions. If your company can employ over twenty people, then it is probably safe to say you may be in a position to employ a payroll specialist that knows all of the ins and outs of payroll and do this for a living.

Comparing inside costs vs. outside costs

Many business owners greatly underestimate the time and expense it takes to manage payroll records and issuance. It usually is not very long before a business owner realizes he or she needs help with these details in order to be free to make the business grow. Payroll is a daunting and recurring task; it is also very time-consuming.

Keeping current with taxation and tax recording requirements

There is magic in numbers and economies of scale. Payroll outsourcing companies have the luxury of hiring payroll tax handling specialists because they can employ them across their entire clientele. Most small businesses could not afford such an investment. Also, not surprisingly, the novelty of owning your own business runs out quickly when business owners start getting bogged down in assuring the accuracy and record keeping involved in tax details.

This is true of big business also. The more departments/people these specialists can be pro-rated to, the more likely you can employ one or two experts dedicated to the payroll task. For most small businesses, that is just not going to happen.

Making the differentiated decision

Can you save your own valuable time and be more productive?

Are the people who are presently saddled with the task too expensive? (for example, owners, your own best sales person, your best closer)

Do you have the knowledge to do the deductions accurately and avoid bending or breaking regulations or incurring paying penalties?

Can you avoid ever making mistakes that get pointed out by your increasingly unhappy employees?

For a business of fewer than twenty or so employees, having another company handle payroll tasks can be a great relief to a busy staff in a small business. You may well find that you cannot afford to keep doing this yourself."

Clearer vision provides the answer

Take a closer look at your efficiency in payroll, and be objective about your company's strengths and weaknesses in that area. That should let you answer your own question. With the economies of scale that payroll outsourcing can bring, payroll outsourcing will probably be the best answer for a small business for quite awhile. The good news is that you can grow faster when you can focus on what you do well. When you get to be a big business, you can, with the experience behind you, ask yourself the question anew.

For more information about how we can help you with your Human Resources and hiring processes, call us at 888-700-8512, request a proposal or contact us.

CBR is named the first PEO in Arizona to be honored as a BBB Ethics Award Finalist for 2006 and 2007. This award applauds employers as they strive to ensure that ethics remains a driving force in their business.