Why Payroll Is One Function You Should Outsource
A non-core function is one that is not a profit centre (meaning, you don’t charge customers for it). A non-core function may be essential, but doesn’t differentiate your business strategically from competitors.
In most businesses, administrative and back-office activities such as payroll are non-core functions. As such, they are potential candidates for outsourcing.
But the question business owners and managers want answered is: what do you actually gain from outsourcing payroll? Is it worth all the time and effort just to outsource a service such as payroll? Then there’s the work involved to transition the function outside to the third party service. Do the benefits of outsourcing outweigh that effort?
Several long-term advantages are to be gained from outsourcing payroll. Ideally, outsourcing achieves three main goals:
• It frees up time and resources to focus more on your core business.
• It gives you access to more technology and expertise to perform payroll well.
• It reduces costs and risks.
What do each of these benefits mean?
1. Focus Better on Your Core Business.
Payroll is one of those critical functions that may not directly increase sales. But carried out poorly, it can put your business in a world of hurt. And most of all, it can sap internal time and attention away from core activities.
Businesses have to comply with a wide range of laws when it comes to payroll for employees. It takes considerable time and attention to detail to deal with them.
There are the obvious legal requirements, such as tax reporting and remittance. There are requirements around withholding taxes and national insurance and now pensions auto enrollment from the employee’s pay, and also calculating the employer’s portion of taxes. There is also electronic filing with HMRC requirements.
2. Get Access to Expertise and Technology
Another reason to outsource is to get access to expertise and technology.
Just as important as expertise is new technology. Employers today rely on technology to operate more efficiently. As a business grows, employers have more employee records to keep and also need more reporting. Lack of technology becomes a hindrance to scaling for growth of the business.
3. Reduce Costs and Risks
Outsourcing payroll can also assist with cutting costs and limiting risks.
A good payroll provider offers capabilities that go beyond what you can do on your own. If you haven’t considered an outsourced solution before, make this year the year you switch. It will deliver peace of mind for you as the owner, and free up time in your company.
For free advce on payroll please contact Bergen Associates