As most business owners would attest, running a company is far from being a walk in the park.  Of all the necessary components of a successfully-managed business, one of the most time-consuming and complicated operations is payroll processing.  Payroll, of course, involves everything related to calculating employee payments and deductions, correctly filing different taxes, and staying up to date with regulatory and compliance laws.  While many small businesses still attempt to process payroll manually, there is substantial evidence to suggest that outsourcing payroll to a Professional Employer Organization (PEO) is often the smarter choice.  Let’s look at three reasons why this may be the case.

1) Protecting Against Risk and Costly Errors           

You probably didn’t start your business imagining yourself having to become an expert accountant and tax-code authority.  But, because processing payroll involves lots of numbers and a variety of legal considerations, even a simple mistake by a well-meaning human can result in costly fines and penalties.  In fact, approximately a third of all small businesses get fined in any given year as a result of making a payroll error.  This makes it very clear that navigating the world of payroll is not exactly one of the strengths of your average company.

PEOs, on the other hand, are experts in all things related to payroll and legal compliance.  They have ample experience and resources to process your payroll correctly and they know exactly what paperwork needs to be filed and when to do so.  Relying on a PEO to process your payroll will undoubtedly reduce the odds of making a costly error that could otherwise prove to be a significant setback for your growing company.  Furthermore, partnering with a PEO that is certified by the IRS (known as a CPEO) will further protect your business from any liability doled out by the IRS as a result of a payroll mistake.

2) Technological Efficiency and Ease of Use

There’s a reason why most successful companies—as well as PEOs—don’t process payroll manually.  Besides the obvious potential for making costly mistakes, there are benefits to using advanced software systems instead.  Commonly referred to as an HRIS (Human Resource Information System), this proprietary software operates at the intersection of HR and Information Technology, boasting new levels of electronic automation to push your business towards new heights.

Using an HRIS allows for not just processing payroll more efficiently, but can also handle a variety of other HR activities like accounting, recruiting and assessing potential candidates, as well as providing data analytical tools to improve productivity and inform managerial decisions regarding expenses.  The software can even be integrated within apps on your employees’ phones to further enhance attendance tracking, worker engagement, as well as quickly distributing information or policy changes.

An HRIS sounds excellent in theory, but what’s the catch?  The cost, of course.  Depending on the size of the business and the number of designated users, the expense of employing such a software solution can range wildly but typically, on average, costs a few thousand dollars per month.  On the other hand, by partnering with a PEO, you’re likely to receive the benefits of using an HRIS included in the cost of the PEO’s services, meaning that even a small business can gain access to these powerful technological perks.

3) Saving Time and Money to Reinvest Elsewhere

The benefit of allowing a PEO help with payroll ultimately boils down to this final point.  By removing the need to self-manage the complexities and risks of processing payroll, bookkeeping accuracy, and navigating tax codes and compliance laws, your business ends up with additional time and money to reinvest elsewhere.  The simple act of outsourcing payroll to your PEO should thus grant you the freedom to reallocate this time and money towards other areas of your core business that need it most.  And, to any growing enterprise seeking a bright future, this opportunity is surely the most valuable asset of all.

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