Should you Outsource?

The great payroll debate

Should you hire a Payroll Service or do it yourself?  As an employer, it's your responsibility to make sure your employees are paid accurately, on time and within the confines of the many ever-changing laws.  Deciding how to manage your payroll may seem simple at first, but there's a lot to know from payroll taxes to W-2s...minimum wage to overtime laws...filing requirements to penalties...and more. To make the right decision for your business, you need to consider if you intend to perform in-house payroll. 

Using a manual system or a software package, you can calculate and produce your employees' paychecks each week. You can also figure out your payroll tax obligations and make your own tax payments. Then, when it comes time to file your quarterly and annual payroll tax returns, you can either hire an accounting professional to generate those reports for you or do them yourself.  Before deciding to administer payroll in-house, there are a number of questions to answer:

·         Who will manage payroll and are they properly trained to do so?

·         Doe the payroll person have any other responsibilities?

·         Who will have access to the payroll information?

·         Who will make payroll deposits?

·         Who will keep track of changing federal and state tax regulations?

·         Who will prepare and file payroll tax returns?

If you are going to use software, there are additional questions to consider:

·         How much does it cost?

·         What is the annual update fee?

·         How long will it take to learn the software?

·         Who can access the information?

·         What happens if your computer crashes?  Can you back-up your payroll information?  What additional hardware or services does this require?

If you cannot answer YES to these questions, you should consider outsourcing your payroll to an outside service:

·         Can your organization handle every payroll calculation and detail with precision and timeliness, week after week?

·         Are you completely familiar with all that is required in filing payroll taxes for your company, as well as for each of your employees?

·         Do you have a system to issue payments automatically?

·         Do you have the time and personnel to make sure all of these operations are performed accurately throughout the year?

·         Is your time (and key staff) better spent working on payroll rather than growing your business?