In today’s digital age, just about anyone can run a business right from their laptop or even from their smartphone. More and more entrepreneurs are taking up the reins and starting their own companies. As those small companies begin to grow, some may find it difficult to scale their business while also focusing much needed attention to payroll and tax compliance. This is where hiring payroll service becomes a necessity
Juggling the integral functions of a business while also handling the finances and human resource functions can be no simple task, which is why many companies small and large have elected to outsource their payroll and resource management functions.
In this article we are going to have a look at some of the reasons why you should consider outsourcing payroll services for your business.
1. Time Saved is Money Earned
Depending on the size of your company, payroll and compliance can be a full time position in it’s own right. One of the most important guidelines for running a business, large or small, is that any work you do with regard to your company should be focused on generating income. If you are not generating income, you are working for free.
Tasks like accounting and payroll are time consuming, and while they are a necessary part of any solo business, and even more so when you have people working under you as subcontractors or salaried employees. The hours you spend going over numbers and balancing the books could be spent on more important business functions that do generate income.
Outsourcing payroll affords you the ability to focus your attention where it should go, making money. Trained accountants and financial advisors like those at Excellent Admin know the ins and outs of tax compliance and compensation laws to save you from having to spend endless hours navigating the miles of red tape and regulations.
2. Improved Security is Peace of Mind
There’s a fair amount of risk involved with in-house payroll especially when it comes to larger companies. The door is wide open for identity theft and fraud. Employee records can be accessed by internal payroll employees, and unscrupulous people may tamper with records for their own gain. There’s also the risk of embezzlement.
Additionally, you’ll need to consider the security of your payroll software. While the software itself could be relatively secure, you may house your data on a server or network with security flaws that could leave you open to data theft.
On the other hand, outsourcing your payroll to a dedicated accounting agency generally means that your data will be housed on private servers with heightened security protocols and encryption that is designed to keep your information safe from prying eyes or any would be data thieves.
With this in mind, you can see why it makes sense for companies looking to outsource payroll. A company dedicated to keeping your company’s sensitive financial data safe. You’ll sleep more soundly knowing that your information is secure.
3. IRS Audit Prevention
If you have ever been audited by the IRS, then you know just how excruciatingly nerve-wracking it can be to deal with the hours and hours of depositions and hearings that can follow. The IRS audited almost 1.1 million tax returns, approximately 0.5 percent of all returns filed in Calendar Year 2016.
Higher income individuals are more likely to have errors on their tax returns that generate IRS red flags than individuals with lower income. Because you file a tax return each year and have about less than a 1% chance each year, it is more likely than not that you will get audited at some point in your life. If you have never faced audit, then consider yourself lucky that everything has gone smoothly up until this point.
It doesn’t take much error on important tax reporting forms to trigger red flags with the IRS, in fact, wrong names, social security numbers, EINs, and other incorrect information are among the most common mistakes that can lead to an audit.
Payroll accountants are trained in the ins and outs of compliance and tax law. They have studied compliance and financial law and have the knowledge it takes to navigate the figurative maze of information. With a financial expert in charge of payroll function, you may be able to safeguard yourself against the audit nightmare.
These are just a few of the major reasons why smart entrepreneurs are outsourcing payroll to companies like Excellent Admin. With these key reasons in mind, you should consider if outsourcing payroll is a good solution for your growing company.