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To Outsource or Not to Outsource, That is the Question

If you’re a small to medium size business considering whether to outsource your payroll services or not, likely it comes down to two things: 1) costs to outsource versus current in-house costs and 2) service level. Of course expertise and flexibility based on your unique business needs will rank up there as well. It’s important that the company you outsource to, your payroll services vendor, has a good grasp of your goals, business vision and expectations.  This is key so that you are not over served with bundled payroll packages with additional services you might not even need but they are there in case you do.  You can begin by outlining how much you plan to grow, your headcount for full-time, part-time and/or contract employees on your payroll in the coming fiscal year, and if you’ll be providing raises, bonuses, or even a 401k.  


You’ll get great input from your payroll services vendor. Your payroll services vendor will help you keep up with changing regulations and tax code, user guides and training for their software to get you up and running, plus access to government forms you use. Timeliness and accuracy are key to what outsourcing can offer as payroll mistakes particularly for smaller organizations are fairly commonplace. 

A provider who can also do the preparation on all W-2 and 1099 forms for your employees and the payroll tax processing and payments can take some well needed weight of your shoulders.

 In a recent article, Rhonda Abrams, president of the business services site The Planning Shop and author of the guidebook Hire Your First Employee stated that one of her rules is if you have one employee, she recommends getting a payroll service. “The penalties for screwing up are so much more expensive than the cost for payroll”, says Abrams. Good advice for start-ups, freelancers and recent college grads heading towards entrepreneurial careers.

Time Savings

Another top reason you might consider outsourcing your payroll services is it really allows you to focus on what you do best, run your company. You’re the expert on your company’s business, no one else and quite possibly the strategist, the sales person and the marketer all wrapped up into business ownership. The suggested rule here is your time is valuable and your energy would be better served driving revenue than keeping your books. 

Ask yourself if paperless payroll, employee self-serve, electronic reports, online employee pay statements, new hire reporting, job costing, worker’s comp tracking and quarterly and year-end tax filing sounds like a lot of work that you no longer have to do. If the list is long, shorten it and work with your account representative to really narrow down where your time is spent on payroll efforts.

Direct Deposit

Direct deposit eliminates the need for paper checks, so you don’t need to worry about lost or stolen ones. This is the modern and preferred way to receive compensation and according to, ‘three out of four working Americans who have direct deposit available for their pay use it, and usage continues to grow’. It’s simply convenient and if you are a small business or a start-up with just a handful of employees, this matters to them and your recruiting efforts. 

To enroll requires the participant to complete a little paperwork and your payroll service provider can provide these forms to you. The provider’s software will assist with setting-up files for direct deposit and testing in a demo environment along with assisting you with correcting any errors. Once you are live on a platform, you will be able to send a pre-notification on your employees account and test the process before your first electronic deposit transaction takes place. 

In conclusion, ultimately you’ll have an additional member of the team on your side and a vendor relationship you’ll likely come to rely on. Leveraging your payroll service provider relationship and experience truly levels the playing field and the cost for all of these benefits should prove to be a fraction of the cost to do this work yourself.

We hope this helps. If you have any additional questions about SBS Payroll, Inc. please feel free to contact a sales representative or call us at (855) 591-9864.Contact us to learn about payroll, HR, HCM, benefits, and time clock services

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