Debunking 4 Common Payroll Myths
Many companies subscribe to myths about payroll. Let us "bust" them for you.
1. I don't have enough employees to use a payroll service.
Even if you have only one employee, there's still a lot to be done in terms of payroll. Ultimately, you must ensure that you're following all federal, state and local payroll laws that are relevant to your business — including minimum wage, overtime, employee benefits, tax withholding, payroll tax reporting, recordkeeping and more.
So, your business is not too small to hire a payroll service. In fact, studies show that smaller companies are more likely to outsource payroll than larger companies. This is because smaller businesses often don't have the resources needed to handle payroll in-house.
Note that many payroll providers offer bundled services that are specifically designed for microbusinesses, small businesses and small to midsized companies.
2. I won't have any control over my payroll. I'll be completely in the dark.
You decide how much of your payroll you'd like the provider to manage. For example, the provider can process your entire payroll (also called "payroll administration"), or you can use the provider's online platform to administer payroll on your end.
Many payroll services offer payroll administration, benefits administration and payroll tax administration because all three are closely related. But you don't have to outsource all three.
Also, a good provider will keep you up to speed on important matters affecting your payroll, including regulatory issues requiring your attention.
So, if you'd like to retain more control over your payroll, you can work that out with the provider. Just make sure the final terms are expressly laid out in the contract.
3. Switching payroll vendors is too much of a hassle.
The right provider has a reliable implementation team in place, ready to help you migrate to the new system in the most efficient way possible. They're seasoned professionals who have been down this road before. You can rely on them to tell you which files and documentation must be submitted and which processes must be undertaken to get you up and running in a jiffy. They also don't hold back on training, which you will need in order to be able to aptly navigate the new system.
4. Outsourcing payroll tax administration is overrated.
Employment tax laws are always changing, and it doesn't help that they're regulated on a federal, state and, in some cases, local level. Each agency is dedicated to enforcing its laws and can be very aggressive in its pursuit of employers who fail to comply. Most employers know this, which is why companies that outsource payroll processing tend to use the same provider for payroll tax administration.
Payroll tax administration is a multitiered process, consisting of employee and employer taxes. Outsourcing this role can save you not just valuable time but also money. Overrated it is not.