According to the IRS, up to 40% of small businesses pay some kind of late fee for incomplete and incorrect tax filings. The average penalty for these costly errors is approximately $800.00. However, despite these fees, a number of companies rationalize their decisions to stick with their manual payroll processes. Perhaps yours is one of them. Perhaps you’ve decided to chalk these penalties up as just another cost of doing business. If so, then ask yourself one simple question; how much in sales does it take your enterprise to generate one dollar of net profit? Let’s assume it’s $5.00.
This means that for every dollar saved in late fees, your company secures a return on investment of 500%! Now, that’s something worth considering.
Why do Firms Ignore These Costs?
Why do so many companies ignore the costs of these aforementioned late fees? After all, wouldn’t it just make sense to use an outside payroll service firm, one that understands withholding taxes and one that can ensure the company never pays another late fee? Are there companies that are even capable of providing such a guarantee? In fact, there are. Today’s outside payroll firms are able to provide a guarantee that their customers will never face another penalty for late or incorrect tax filings.
These firms are experts in compensation management. Not only do they assume full responsibility for payroll management, but they also provide companies with guidance concerning government regulations, tax codes, and a myriad of other potential pitfalls. What other benefits are there to working with these firms?
Outsourced Payroll Reduces Costs: Bottom line, outsourcing payroll reduces costs. It does this not only by eliminating the high costs of those aforementioned penalties and late fees, but it combines these costs savings with additional savings accrued by reducing overhead and the costly errors of manual processes. Manual payroll processes are problematic, costly, and extremely time-consuming. Outsourcing payroll is easy, saves time, frees up valuable resources, and helps companies better control their overall cost structure.
Provide a Full-Service, Turnkey Solution: An outside firm is able to keep abreast of the latest changes in tax codes, tax laws and government regulations concerning withholding fees. They are able to provide guidance and consultation on all things related to compensation management. They can do direct deposit, fill out an employee’s W-2 form electronically, and ensure that the company is withdrawing the proper percentages and amounts of withholding taxes. In addition, they can help companies manage all things related to vacation pay and absences.
Upgrade the Company’s Internal Service Competencies: One of the problems with outsourcing is that it’s often difficult to lower costs, and be able to upgrade the company’s service capabilities at the same time. In fact, finding that balance is extremely difficult. However, outsourcing payroll is a simple, cost-effective solution that all companies can benefit from. It’s one that immediately reduces costs, upgrades the company’s internal service capabilities, and frees up valuable internal resources.
To succeed in today’s global market place requires the impetus to identify and close on each and every business opportunity. Trying to reconcile payroll with manual processes is not only costly, but incredibly time-consuming. Business owners shouldn’t have to worry about whether they are compliant with the most recent government regulations. Instead, they should focus on growing their business. Outsourcing frees up valuable internal resources, reduces costs, and guarantees that penalties for late tax filings are a thing of the past.