Over the years there has been a great deal of uncertainty as to just what constitutes a small business. Some people believe that the definition of a small business is based on the number of employees working for a company and others believe that revenue defines size. Actually, both are right in terms of how small businesses are defined by the Small Business Administration.
According to the SBA, a business can be classified as small if there are between 100 and 1,500 employees and as for revenue, that margin is also quite wide. Their definition of small business revenue falls between $1 million and $40 million. Perhaps these figures that appear to be all over the place give you a slight indication as to why a small business may want to outsource payroll. If that alone isn’t enough, then check out these three other ways outsourcing can benefit your small business.
1. Tax Laws
Many small businesses have trouble justifying the expense of outsourcing payroll, especially if the company falls on the low end of employees and revenue. However, unless you employ an experienced accountant, you might inadvertently violate one of the many tax codes, leaving you in for a huge fine. Those fines can be greater than what it would cost to employ an entire accounting team! It has happened. This is why so many small businesses contract experienced teams like the G&A Payroll team of G&A Partners. Those tax laws can get you every time.
2. Avoiding Compliance Issues
This is another issue that could land a small business in a heap of hot water with the government. From time to time, financial regulations change and if your accounting/payroll team isn’t clued up on the ever-changing regulations, you could be slapped with a huge fine here as well. All your life you were told that ignorance of the law is no excuse, and this is one instance where you really would learn the hard way. Professional payroll firms make it their business to ensure that your company stays compliant, thus saving you money in the process.
3. Establish Self-Serving Payroll
Another innovative way to reduce dependence on the payroll department is to establish a self-serve payroll platform. There are various levels which can be instituted but if employees ‘clock in’ on a mainframe, then all their timecards are up to date and as accurate as humanly possible. At the end of a pay period, the employee logs in and then continues to check off anything that is pertinent to their job description and filing status. They can claim sick days, vacation days, comp time and so forth. Employees can change their filing status and edit any and all personal information. This saves time and effort not only in payroll, but throughout all of HR functions as well.
While a small business could hire a professional payroll department to work on site, most choose the safer and more cost-effective option of outsourcing to a knowledgeable and experienced team. If you want to keep up with regulations as they are legislated, this would be the wiser choice. Who else but a team totally committed to all functions of payroll would you put on the job?