Every business or company with employers is expected to have a payroll in place. There are two main options when it comes to building a payroll. The business can build a DIY payroll – a payroll created and managed by the business owner. Alternatively, they can outsource the responsibility to reputable payroll companies out there.
Logically, any business would prefer a DIY payroll. Yes, it saves cost and appears easy to setup. But this assumption is mostly uninformed and sentimental. Contrary to popular view, a lot of work goes into creating and managing a proper payroll for a business or company with employees. It goes beyond just multiplying hours worked and the hourly rate.
From collating employers’ EINs (Employer Identification Number) to having them complete the W-4 form and drawing a payroll schedule, organizations with many employees will most likely struggle to get it right with a DIY payroll system. There is also the need to collate and withheld taxes accurately and ensuring each paycheck gets to the employee with no error whatsoever.
Conversely, outsourcing your payroll system means you are handing over all of these responsibilities to another company entirely. This allows you to focus on other important aspects of the business and ensures you get the best possible payroll system that works as expected.
Here are some of the obstacles you may face when you choose to build and manage your payroll in-house:
Be ready to spend significant amounts of time on your payroll system every week with little or no choice. Each stage of a payroll system requires considerable dedication and time, from adding up the number of employees, calculating individual taxes to printing and writing checks and filing. Imagine all you can do with those hours stacked up – hours you could invest in growing the business.
A company must familiarize itself with many things to build and manage a successful payroll system—for instance, taxes. Companies must comply with strict payroll rules, including federal and state taxes and local laws and regulations. Taxes, including federal, state, and sometimes local taxes, must be removed from each paycheck before they are sent to the employee. There are also unemployment taxes that must be appropriately deducted and sales commissions and bonuses to be added.
It is only normal that pressure mounts and attention gets divided when working with or on a DIY payroll. Errors like misclassification of employees to not keeping accurate payroll records and missing tax filing and payment deadlines will arise at one point or another. It is even more disturbing when you realize that there is no support to prevent or quickly recover from these errors. A proper payroll company will not make such errors, hence ensuring your payroll is in very safe hands.
You want the sensitive information of your employees and the company to be as secure as possible. DIY payrolls do not exactly guarantee this. No matter how careful you may be, there are security gaps that are difficult to bridge. A DIY payroll requires you to protect the social security numbers, maintain HIPPA laws, and other vital personal information from getting into the wrong hands. The easy way out will be to outsource these responsibilities to a payroll company and have this vital data in secured systems.
Companies or businesses that want to avoid the difficulties and complications of DIY payrolls have an option – outsourcing! Working with a proper payroll service provider relieves you of the enormous responsibilities and the stress and commitments of a DIY payroll.
Do you need help in deciding which payroll service provider to work with? Check out our comprehensive guide on how you can choose the right payroll company.
At Flexible Staffing, we offer best-in-class payroll services to businesses and organizations across different industries. Our services as a full-service payroll company include employee payment, tax deductions, and filing, and writing/printing checks.
Learn more about our Payroll Services and how it can benefit your business. Contact us today, and let’s discuss your payroll system needs.