Outsourcing payroll services can give small businesses a better more effective alternative to managing payroll in-house. Owners of small businesses sometimes feel that doing these tasks internally is more convenient for them. However, there are several reasons why hiring a company may be a better idea.
Small businesses that do payroll in-house are tied down with the extra work of keeping their books balanced. Sometimes, these businesses do not have skilled accountants that have a grasp of how to perform these tasks effectively.
The result is a delay in payments to employees. Employees of small companies are more conscious of the financial situation of the organization. When there are delays in receiving their paycheck, they get distracted. Some staff members may even start thinking of moving to other organizations. They may do this in anticipation of what they perceive as the downfall of the company.
Statistics from the IRS suggest that 4 out of 10 small businesses are penalized for incorrect or late payments. Smaller organizations have fewer employees that can perform and review tax filings in a timely fashion. These companies have to split their attention between their core activities and accounting tasks.
Hiring a professional company can help small businesses in several ways. A payroll company can ensure that your taxes are completed on time as you focus on the core areas of your business. Furthermore, many professional accounting firms can offer a guarantee that the payment will be made on time. However, it is important to note that some payroll services may pay the penalties but not the interest incurred.
A payroll company will generate comprehensive financial reports for small businesses. These reports can help employers get a better picture of their financial situation. They will be in a better position to pay on time and address any financial related issues in the company such as employee compensation.