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Why Payroll Outsourcing Makes Sense for Microbusinesses


Microbusinesses, which typically have less than 10 employees, often have limited resources compared to larger corporations. In an effort to save money, these business owners may initially choose to handle as much as they can on their own, including recurring tasks such as processing weekly or biweekly payroll for your employees.

The problem with this approach is that complicated tasks such as payroll can take away from your focus on the functions only you can provide for the business. And no matter how many employees you have, it takes considerable time to do payroll every pay period and stay up to date with complex, ever-changing regulatory changes – and just one payroll error can lead to costly penalties. So while there may be short-term savings of doing payroll tasks yourself, you may want to consider the long-term benefits of outsourcing payroll for your microbusiness.

Complete payroll tasks more efficiently and accurately

Initially, handling payroll manually may seem like the quickest way to handle employee wages. But doing payroll involves much more than cutting checks. Getting new employees onto payroll and incorporating the most recent changes to tax withholding tables are just a few of the many responsibilities. You may not have the time or expertise to complete this work, but a payroll provider can help businesses complete these tasks more efficiently and accurately. Working with a payroll provider can also provide microbusiness owners with:

  • Compliance expertise: When running payroll, you must comply with various local, state, and federal regulations. The problem is that it can be difficult to keep up with and understand applicable laws. The right provider has the expertise to interpret and update systems accordingly.
  • Tax services: Get help calculating, paying, and filing your federal, state, and local payroll taxes with the appropriate agencies.
  • Tax credits: Tax credits may be available for microbusinesses and small operations, but applying for them can be complicated and time-consuming. Some payroll providers can help you identify and claim credits based on location, job creation, research and development, cost segregation, and training.
  • Employee access: Spend less time answering employees’ questions by giving them controlled access to their payroll information online, including check stubs and W-2s.

Prepare for your business’s future

Outsourcing payroll can help position your microbusiness for future growth. Regulatory changes that impact payroll can be updated within the system, thereby avoiding the need to constantly rework manual processes. With an integrated system, additional HR modules can also be added, such as benefits administration, time tracking, and employment screening. Instead of switching to a more robust platform in the future, microbusiness owners can integrate these components into their payroll processing system when needed.

Rather than taking the time and dealing with the hassles that often come with doing payroll manually, microbusiness owners should consider the benefits of using a payroll system. The peace of mind gained when working with a payroll provider allows microbusiness owners to focus on the most important work at hand: running the business.

This website contains articles posted for informational and educational value. Paychex is not responsible for information contained within any of these materials. Any opinions expressed within materials are not necessarily the opinion of, or supported by, Paychex. The information in these materials should not be considered legal or accounting advice, and it should not substitute for legal, accounting, and other professional advice where the facts and circumstances warrant.