Payroll Outsourcing: 7 Signs Its Time for Outside Help

Businesses can build exceptionally effective outsourcing partnerships with careful provider selection, thorough implementation planning, open communication channels, and ongoing governance. By leveraging these economies of scale, PEOs pass on cost efficiencies and savings to their clients. Similarly, bundling integrated HR services through PEOs eliminates the hassle and expenses of managing multiple vendor relationships. Outsourced payroll can create data integration issues with the business’s existing HR and finance systems. Yet, managing payroll in-house has become increasingly complex and risk-laden for many companies.

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1. Inaccurately filed federal payroll taxes may result in penalties and legal issues with local government agencies.
2. In fact, the IRS issued penalties to businesses in 2023 that amounted to over $4.6 billion, for late or erroneous or payroll tax payments.
3. When you partner with a PEO, all required payroll tax returns and payments are handled end-to-end.
4. Here are some questions to ask yourself if you’re wondering why you should use a payroll service or professional.
5. It’s usually a good idea to start pricing payroll services when you get close to ten employees.

They likely use employees with task-specific training and have all the necessary software on hand. Finally, the client shares all relevant information the provider needs to complete the payroll functions it will assume. Payroll providers also maintain your payroll records and provide an array of financial and regulatory reports to ensure you can run your business properly. Some providers go a step further and offer business support services that extend beyond the payroll domain. Using payroll software isn’t typically considered outsourcing since it still requires work from your team.

You will need to let all your employees know what service you are using, and they may be required to enroll for self-service tools. There are several ways to outsource payroll, each with its own pros and cons. The right payroll solution will be one that provides positive answers for all three.

Outsourcing payroll pros and cons to know

SafetyWing is a health insurance provider for remote workers and teams. Using a full-service solution that combines payroll, HR, and more in one platform—like Deel does—will provide even more valuable insights. Enhance employee benefits offerings (at no cost to the employer).

International payroll outsourcing usually involves working with multiple third-party providers across the globe, which can present additional difficulties around compliance, currency, and communication. Payroll can be a complex, time-consuming process — especially if you have employees in multiple locations. There are multiple laws to comply with, tax edicts to follow, and a lot of data to manage.

Outsourcing comes with a payroll support team

This scalability eliminates the need for additional investments in HR infrastructure, enabling your team to focus on your core operations. Deel provided us with the convenience of being able to pay all our employees in literally one click. Our internal teams finally had something that made their lives easier. Paychex offers large business solutions; a blend of service and technology to help in your efforts to stay compliant & in control of your HR infrastructure.

Find out, in detail, what kinds of security measures checking account vs debit card they have in place, including official security certifications and protocols. If possible, consult with your own in-house security experts (or, if you’re unsure, ask an independent security expert). If your potential payroll provider is unwilling or unable to give you this information, it may be cause for concern. Learn how to manage global payroll for your team and keep your company compliant with international labor laws. This is a process fraught with potential pitfalls, especially if you don’t have the resources to bolster your security accordingly.

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There are numerous things to think about, not least of which is the importance of choosing the right payroll partner. Plus, a little effort now will save you tons of hassle down the road. Here are the steps you can take to ensure the transition is seamless. There’s advantages and disadvantages to payroll outsourcing that employers will want to consider. If you offer benefits, you’ll have the added complication of deducting and withholding the contributions employees make. While assessing potential downsides is prudent, the many advantages make outsourcing worth considering.