To run a successful business, small business owners are responsible for many things, including the creation of the name of the business, the organizational structure, the marketing plan and strategy, and a solid understanding of how to make the business grow. A big part of this is financial planning (budgeting), which can be very difficult when starting out.
One of the smartest ways to begin saving money and making a profit is to outsource non-core tasks. These tasks often take valuable time away from what you do best – running your business! Outsourcing payroll or other similar administrative tasks can free up your time and even make you money in the long run.
Make sure you understand the pros and cons of outsourcing payroll or similar non-core tasks. This will help you best know if this is the right course for your business to be headed toward.
What are the benefits of outsourcing tasks? What should you outsource, and why?
Learn how outsourcing payroll can make a huge difference in your business strategies and overall profit. You may be thinking, “How can I save or make money if I’m spending it on hiring someone to help me with payroll?” This is a valid question that will be answered in this article.
Why You Should Start Outsourcing Payroll
Did you know that 82 million U.S. employees (54% of the American workforce) have payroll problems?
To find solutions to these problems, business owners should consider outsourcing payroll. This way, they can decrease the number of payroll problems that exist.
Payroll problems go hand in hand with the fact that most companies do not outsource their payroll. On average, only 15% of small businesses outsource their payroll. If you fall in this category, you should weigh the pros and cons of outsourcing payroll to see if it’s right for you.
As you can imagine, payroll mistakes happen twice as often when companies do their own payroll as compared to those who outsource this task. You would think this would encourage business owners to outsource, but most companies still want to do their own payroll.
Are you doing your own payroll because that’s “how you’ve always done it?” It may be time to branch out.
4 Ways Outsourcing Payroll Can Make You Money
40% of small business owners say that bookkeeping and taxes are the worst part of running their businesses and the most time-consuming! This shows the importance of outsourcing to high-quality sources, people who can help you accurately figure the numbers out and save you a few headaches.
1. Outsourcing payroll saves you time, energy, and money.
Finding the right person to complete a non-core task for you can save you time and money! Benjamin Franklin said it best, “Time is Money.” After factoring in the average 7 hours of sleep each night, we are all left with the same 1,000 minutes each day. It’s how each person uses those minutes that determines their success, mediocrity, or failure in business.
If you have trouble determining what your worth is, figure out what your hourly rate is. Then, determine how long it will take you to do payroll or other accounting duties to see if it would be more beneficial for you to hire someone to help you out. A payroll company can give you peace of mind and take some of the pressure off your human resource department.
2. Outsourcing payroll allows you to focus on core strengths.
Outsourcing administrative duties, like payroll services, to expert professionals, will free you up to focus on building your business. The only way to effectively grow your business is to wisely utilize your time by spending the most time in your areas of core strength. Remember that you are a growing business, and you need time to focus on that growth rather than on business payroll.
If you are at your best while wearing your CEO Hat, meeting with clients, doing presentations, and performing cost savings analysis, it will serve you well to outsource key duties that may fall outside of your core strength zone to a professional payroll service that can look out for your best interests and help keep your business running each pay period smoothly.
3. Outsourcing payroll may alleviate your payroll tax filing worries.
Eliminate the risks of calculating and filing your own payroll taxes by having professionals do it for you. Federal, state, and local payroll tax laws are frequently changing and becoming more complex.
Do you really have the time to go back to school to learn about taxes? How much time do you want to spend learning all the rules and keeping your information up to date?
Payroll experts stay current with the ever-changing tax rules and regulations in regards to payroll information, so you don’t have to. When you choose to outsource payroll services, you won’t have to worry about filing payroll tax-related paperwork. The payroll service will handle all payroll duties for you rather than you having to process payroll in house.
4. Outsourcing payroll can help you avoid costly penalties.
There are the obvious legal requirements, such as tax reporting and remittance, as well as requirements around withholding taxes from an employee’s pay, calculating your portion of taxes as the employer. You will also need to know when to file and how to file at the federal, state, and local levels.
The payroll taxes you are required to pay include: the Federal Unemployment Taxes, any Federal and State Income Taxes, and the FICA taxes. Eliminate the risks of calculating and filing your own payroll taxes by having professionals do it for you.
1. Federal unemployment taxes (FUTA)
Employers must pay this tax based on the gross pay of all employees. These taxes can either be paid quarterly or annually and are documented on IRS Form 940: Employer’s Annual Federal Unemployment (FUTA) Tax Return.
2. Federal and state income taxes
Employers are required to withhold these taxes from employee pay and distribute them to the IRS and appropriate states. For more information on how to reconcile payroll tax forms to the employee’s gross income, check out this video by the IRS.
3. FICA taxes
These taxes are more commonly referred to as Social Security and Medicare taxes. Unlike income taxes, these are withheld from employee pay AND matched by employers. FICA taxes must be paid either monthly or bi-weekly, depending on the size of your payroll.
If you fail to pay payroll taxes, you will be penalized, so it’s important that you understand these or hire a professional accountant who does! Working with a qualified accountant is crucial when it comes to payroll because you’ll want to be in business with someone who knows what they are doing. Trust Borshoff Consulting to get the job done for you!
A Word About Tax Deadlines
If you are filing your 2019 taxes, the filing deadlines can be found on our website. For the 2020 tax year, the deadlines can be found on the IRS’s website.
Also, if you are filing late, we have advice for you on that, as well. There’s no need to panic if you’ve missed a deadline. Just work with a qualified tax professional, and we’ll make sure your tax return is done correctly and that you have the greatest tax advantages possible.
Read all about Penalties and Missed Tax Deadlines for more information on the options you may have available. If you end up owing the IRS money and have an unexpected tax debt, we can help you figure that out, also. We can even answer questions if you are expecting a tax refund from the IRS but have not received it yet.
Conclusion
At Borshoff Consulting, we know that when it comes to payroll service, no one size fits all. With our custom payroll processing options, we can offer you a payroll solution that best fits your needs. Need help with something else? Just schedule your free consultation today, so we can best see how we can meet your needs and offer solutions tailored to you.
Are you expecting a tax audit or want to prepare for one in the event you might be audited? We are well-qualified to represent you in a tax audit against the IRS, so be sure to let us know what’s going on with you, so we can determine how to best help you.
Our staff is well-qualified and friendly – eager to serve you. We’ll gladly point you in the right direction if we don’t have the answer for you. Did you know that we also help with business consulting and tax preparation?
You can count on Indiana’s tax expert to do right by you! We not only seek to make things easy on you during the tax season, but we also do things right the first time around. This way, if you do get audited or need to refer to your records later, we are well-organized and can get you what you need!
You can depend on Borshoff Consulting, so be sure to schedule a free consultation today!
