Most mid-size companies have internal staff to manage the data entry and process administration for their payroll efficiencies. Over time, the complexity of payroll compliance for those companies may require additional training and specialization depending on their industry and business management practices. Yet, the small business owner who employs help at a low cost usually suffers the most.
According to the IRS, 6.8 million penalties totaling $4.5 billion were issued to employers for incorrect payroll tax filings in 2013. Choose 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 choosing an outsourcing payroll provider?
You will be surprised at just how easy the transition can be. We identified a number of steps we found makes the process a bit more identifiable for clients to follow.
1. Initial assessment
Getting advice from an initial assessment is the first step in knowing what is involved having someone take over your payroll processing. Every business has complexities and working with an experienced payroll professional is a benefit in knowing how to identify those complex issues based on the variety of projects that go on in an outsourcing firm.
2. Implementation process
Once the payroll professional identifies a way to leverage your workload, an initial process is developed to work with your data integration. On a usual basis, the professional identifies what kind of provider will work with your set-up and will administer the process for you. Whether your company has employee garnishments, non-cash fringe benefits, or complex vacation policies, the payroll professional assembles the best policy for your business to ensure efficiency in the administration tasks needed.
3. Data conversion strategy
Usually, when a small business owner is making the transition to have an outsourcing payroll provider work with their accounting, it's due to frustration from working in either a legacy payroll system or an older system in need of an upgrade.
Data conversions usually should cover:
- Enter year-to-date history so all W-2's are generated.
- 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 to confirm data and tax settings are correct
4. Customer Support
Once the implementation, process, and data conversion are in place, your payroll provider should now be able to manage each aspect of the activity from a day-to-day perspective. However, questions do come up and you should be able to reach your provider via various methods. Make sure you have a solid contact number, email, and address in case you need any support to your questions.
Identifying that your payroll process is eating away at your time or that you need a more sophisticated and more modern way for your employees to feel protected is the most important investment in a company. If you have any questions about learning more about payroll solutions, we can provide you with a free consultation.
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 increase focus on their growth through outsourcing. If you want to know how we can help you, contact us today!