When compared to bigger companies, small businesses face a whole host of unique challenges, many of which they may not have the funds or resources to handle effectively in the same manner as a large business might.
Large companies are able to handle many of their challenges in-house, with the help of administrative staff, accountants and bookkeepers, and a HR team. For smaller businesses working to much tighter budgets however, many of these essential tasks either fall by the wayside, or are tackled by those without sufficient training and expertise, leading to errors, and possibly even penalties from the IRS or lawsuits from disgruntled employees or clients.
One of the most important administrative tasks businesses with even a small number of employees must get right or face the consequences (which can prove costly), is payroll. While it is possible for small business owners to try and take care of payroll themselves, with frequently changing rules regarding taxes and employer regulations, the chances of getting it wrong and incurring not just the wrath of the IRS, but their employees, too, is high to likely.
So, with this in mind, what can small businesses do to minimize the risk of costly payroll errors and keep both the IRS and employees happy every month?
Small business payroll options
Small business owners can either choose to hire an in-house payroll administrator (which comes with a salary and additional expenses such as healthcare and sick leave), or outsource their requirement to an expert, third-party provider. It’s worth noting that usually, payroll providers charge fees only for work they’ve carried out on behalf of a client, unlike in-house payroll assistants who would be expecting salaried pay and all the benefits.
While bigger businesses are likely better placed to hire someone to manage payroll on a full-time basis in-house, smaller businesses may struggle to cope with the additional cost, and would doubtless benefit much more from outsourcing, and here’s why:
The benefits of outsourced payroll for small businesses:
- Providing smaller businesses with an ultra-efficient, automated payroll system, this enables them to handle internal payroll matters with ease and without the added expense of an extra full-time employee.
- Many reputable outsourced payroll providers also offer a range of other services designed to complement payroll and offer employers relief with tasks such as recruitment, background checks, labor posters and much more.
- Outsourced payroll services give smaller businesses the opportunity to swiftly to adapt to market, economy and industry changes as and when required.
- With the help of a third-party payroll provider, employers can rest assured that they’re always dealing with their employees in a legal, and regulatorily compliant manner.
- Avoiding fines and penalties associated with payroll is simplified with the help of an outsourced payroll provider.
To conclude:
With fewer resources and a smaller budget, but just as much needing to manage payroll effectively as larger firms, smaller businesses typically get a great deal of use out of third-party payroll providers, and find them to be a much more cost-effective, convenient and practical way to pay employees on time and stay up-to-date and compliant with all applicable laws and regulations related to payroll.
To find your perfect payroll partner, simply conduct an online search, read some candid reviews, and select the best fit for your company and its needs.