Running a small business comes with a host of challenges that must be addressed on a regularly basis, especially during periods of growth. Once the success of your business necessitates additional employees, it can be difficult to determine how to handle those responsibilities with your limited resources, especially when it is not cost effective to hire a person specifically to perform payroll duties.
In order to maximize your profits through the control of your labor costs, it is wise to consider outsourcing your payroll duties to a specialty service designed specifically to take the place of a full time payroll clerk. Not only can these services be obtained at rates that are much lower than the $42,130 mean annual salary paid to payroll clerks within the United States in 2015, but it also provides additional opportunities to concentrate on your primary business operations.
In order to properly process payroll, specialty software is often required. The software is designed to assist with the calculation of applicable deductions, as well as designating funds for mandatory quarterly or annual tax filings. For those without a strong background in accounting and payroll processes, these activities can be daunting even with the use of specialty software. This is augmented by the fact that tax laws change on a yearly basis, making it a challenging industry to remain on top of when it isn’t your core activity.
By outsourcing your payroll, you will not only simply your processes, you are also ensuring that your information will be handled by professionals who are specifically trained in the latest software applications as well as any applicable laws that must be addressed.
Commitments and Core Business
Processing payroll requires time and energy which may be better spent directed towards your core business functions. If you attempt to manage payroll yourself, this will draw your attention away to other critical business functions. While bringing on a payroll clerk will prevent you from having to personally attend to the requirement, it will take funds that could be reinvested into the business in order to properly compensate the new employee.
When payroll is outsourced, you not only save money, allowing additional funds to be reinvested in growing your business, but you also provide yourself with the additional time your business deserves. This can increase your overall business efficiency as there are fewer business segments that must be directly managed.
Competing in the Marketplace
Keeping operating expenses low allows you to pass this savings on to your customer in the form of lower consumer product costs. In competitive markets, being able to keep your pricing in-line with, or below that, of your competitors is a key to overall business success. Additionally, you can focus more time and funds toward new product or service developments in order to differentiate your business from the rest of the pack.
Since most small businesses are not in a position to take advantage of economies of scale in their business activities, any financial savings that also increase overall business efficiency is a win-win. Not only will it ensure your payroll is handled professionally, with all of the processing and direct deposit benefits experienced by larger companies, but it also provides you with more time to focus on the things that matter most to the growth of your business.