Why You Should Outsource Payroll Services for Your Small Business

Ready to process payroll? If you’re like many small business owners, doing another payroll is about as much fun as plucking arm hairs out one by one. In addition to being time-consuming, though, payroll can be confusing and difficult, and doing it wrong can have serious consequences for your business. Since you can’t just choose not to process payroll, here are a few reasons it would be beneficial to outsource it.

Outsourcing your payroll to WTA, Inc. can have many benefits for small businesses.

1: Time Savings

In 2015 more than half of all small businesses reported spending 3 or more hours a month on payroll (11% report that it takes them 10+ hours every month), a number that has likely increased since that time with changes to payroll taxes and other employment laws. In addition to that time, 58% of businesses reported spending over 40 hours a year on tax preparation. While not all of that is related to payroll taxes, it requires a significant time commitment to prepare all the required quarterly and annual payroll filings. The time increases if you have little or no knowledge of tax laws, and could be taken off your plate entirely if you simply outsource it to a payroll and tax firm.

2: Cost Savings

It might seem like keeping your payroll in-house would save you money, but about one-third of all employers make some type of payroll reporting error, according to the IRS, which costs companies billions of dollars annually in fines and fees. That alone should be enough to make small business owners seriously consider the benefits of paying someone else to do payroll (and get it right).

Other costs that an outsourced payroll agency can help with are time spent calculating payroll, signing and distributing paper checks, generating reports, reviewing and auditing timecards to avoid errors in things like paid time off, and paying the appropriate taxes.

3: Avoiding Legal Headaches

One of the most common errors in payroll is the misclassification of employees—for example, classifying someone as a 1099 contract employee (withholding no taxes) instead of a full employee (withholding and paying all taxes). Classification rules can be confusing, so having someone look objectively at your employee pool to determine classifications can save you a lot of headache down the road.

Another potential legal issue many small businesses run into is changes in tax withholding amounts. The tax laws have changed significantly in the last two years, so you may not be withholding the right amount from your employees’ paychecks, which could cost them and you at the end of the year. In fact, around 1.8 million small business tax returns (those with income from $200,000 to $1 million) were audited in 2016, and over half—978,564—were assessed some type of civil penalty.

Don’t spend any more time worrying if you messed up on payroll or filed the right forms with the IRS. Outsource your payroll to WTA, Inc. today and let our experienced team help.