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Time is Money: The 411 on Outsourcing Payroll Processing

How does Payroll Processing help employers?

A recent InfusionSoft survey found that “time to get everything done” is the single most frequently cited challenge faced by business owners. In small and mid-sized businesses especially, owners and executives often find themselves spending hours weekly (if not daily) on administrative payroll and HR functions instead of focusing on their core business and growing their bottom-line.

One solution for owners who are spread too thin? Outsourcing the critical but laborious task of Payroll Processing.

While employees benefit from their literal payroll, many employers don’t realize the impact that payroll processing can have on employee engagement and satisfaction. Mis-managing any aspect of payroll processing can lead to employee distrust and fear, items that don’t add up to loyalty or retention. Good payroll – defined as ensuring employees receive payment on time and without error – is a crucial aspect of successfully running a business and retaining quality employees.

How can outsourcing payroll processing help my business?

When you choose to outsource your payroll processing function, you can relax knowing that payroll specialists handle everything, including payroll administration and distribution; W-2 preparation; certain HR and government reporting; time off accruals and tracking; and more. Good payroll processing companies also offer web-based portals that give employers and employees the ability to track hours, request time off, view reports, and handle other tasks quickly and easily. An added benefit, payroll processors can also efficiently and expertly help employers stay on top of difficult and special circumstances like wage garnishments, minimum wage and overtime requirements, and tax withholdings and filings.

What can employers reasonably expect after outsourcing payroll processing?

Time and costs saved: This benefit is particularly impactful for small and mid-size businesses that cannot justify employing a full-time employee in charge of payroll. Someone must do it, and without outsourcing, it can easily consume half of an employee’s week. That’s time that would more ideally be spent on core, revenue-generating activities.

Expertise gained: Payroll processing is governed by a patchwork of frequently changing federal, state, and local regulations. Payroll can also incorporate specialized situations above and beyond simply cutting checks. Outsourcing gives employers access to dedicated specialists whose entire job is to stay on top of current requirements and to deal knowledgeably with every kind of payroll situation imaginable.

Risk reduced: This benefit ties directly to expertise gained. The risks of non-compliance decrease as access to expertise increases. While not true of all processors, some payroll processing organizations will even take over liabilities related to payroll taxes. If you outsource your payroll to a Professional Employer Organization (PEO), for example, your business will typically assume the payroll tax ID number of the PEO, which can reduce your potential liability. When you file taxes under the PEO tax ID number, it’s the PEO that’s liable for the collection and remittance of payroll taxes.


Need more information on payroll processing? CoAdvantage, one of the nation’s largest Professional Employer Organizations (PEOs), helps small to mid-sized companies with payroll, benefits and HR best practices. To learn more about our integrated HR outsourcing solution, contact us today.