According to the IRS, 6.8 million penalties totaling $4.5 billion were issued to employers for incorrect payroll tax filings in 2013. It is critical for small business owners to work with a payroll provider that offers a payroll tax compliance guarantee and will take responsibility for any penalties incurred. This benefit alone can provide enough cost savings to justify outsourcing payroll.
So, what is involved in selecting and outsourcing a payroll provider? You will be surprised at just how easy the transition can be. In this article, we will identify a number of steps that we found to simplify the process for our clients.
1. Initial Assessment
The first step to outsourcing your payroll processing is to get advice through an initial assessment with a payroll provider. During this part of the process, you will learn about the ways that a payroll provider can benefit your small business. Every business, no matter its size, has a unique set of complexities.
Working with an experienced payroll professional who can identify those issues and navigate them with ease will greatly benefit your company.
2. Implementation Process
As soon as you hire a payroll professional, they will begin to work on identifying a strategy for integrating your data. Typically, a payroll professional will first identify your existing system. They will then find a provider that will work in conjunction with that system. They will then begin to administer the process for you.
Whether your company has employee garnishments, non-cash fringe benefits, or complex vacation policies, the payroll professional provides you with a system for your business that ensures efficiency and accuracy.
3. Data Conversion Strategy
In most cases, small business owners often make the transition to an outsourced payroll provider due to frustration with their existing payroll system. This is often a legacy payroll system or an older system that requires an upgrade.
Data conversions should cover the following:
- Enter year-to-date history to generate all W-2's.
- Import payroll and employee data from previous years.
- Perform payroll compliance assessments to reconcile data history.
- Run parallel payrolls to the first live payroll submission, confirming both data and tax settings are correct.
4. Customer Support
Once the implementation process is complete and all data converts successfully, your payroll provider will begin to manage each aspect of payroll activity.
You will likely have questions throughout this transition process. Be sure that you are able to reach your payroll provider to access the support you need.
It is important to understand that your payroll process is taking away from your valuable time as well as adding unnecessary frustration. Working with a payroll professional provides a sophisticated, modernized way for your employees to feel protected and cared for. This is the most important investment that you can make in the future of your company.
We would love to answer any questions you have about the payroll solutions we provide during a complimentary consultation. We look forward to hearing from you soon!
LUXA Enterprises specializes in hrm services, outsource accounting, and payroll services. We match up with ideal candidates for services by allowing small to mid-size businesses to increase focus on their growth through outsourcing. If you want to know how we can help you, contact us today!