Is it Time to Outsource Payroll? 5 Signs Your Small Business Should Consider It
When does it make sense for small businesses to outsource payroll?
As small businesses grow and hire more employees, managing payroll becomes more complex. But at what point should you consider outsourcing?
According to ADP, one of Canada’s largest payroll vendors, its small business clients have an average of seven employees, but they have clients who are both smaller and bigger than that. We asked ADP what situations prompt a small business to look for alternative payroll solutions. They identified five of the biggest.
1. You’re streamlining your operations or unexpectedly lost your payroll coordinator
With rising costs for labour (and pretty much everything else thanks to high inflation), some businesses can’t justify an in-house payroll coordinator. Outsourcing can save costs and give you access to a payroll practitioner with experience across multiple provinces. Generally, there’s back-up, too, in case the payroll practitioner is away sick or on vacation.
2. When it comes to the nine-step payroll process, you’ve “been there, done that”
There are nine distinct steps involved in manual payroll management. Yes, nine. Here’s a list:
Gather time and attendance
Input data
Calculate gross, deductions, and net
Verify data
Perform garnishments
File taxes
Create G/L reports
Create cheques
Reconcile cheques with your credit union
Maybe you’re simply ready to hand most of that over to someone else, and as a bonus simplify life for employees with direct deposits and automated remittances to the Canada Revenue Agency. You’ll still have to review timesheets, add earnings and/or deductions, and approve payroll. But once that’s done, so are you.
3. You’ve experienced the pain of fines and audits and don’t want to go through that again
Fines and audits are more than a nuisance. They take you and your team away from other important business activities and they may cost your business credibility. Maybe you just need to know you’re guaranteed compliance and will be supported through audits when they happen.
4. You can’t face another manual overtime and statutory holiday calculation
Sure, you know how to run the numbers, but it’s no fun. You may be able to benefit from time tracking software, which can digitize and automate time tracking, taking over OT/stat calculations and, at the same time, eliminating the need for manual timesheets and reducing time theft.
5. You’re ready to expand and hire more employees but you don’t have an HR department
Many small and even medium-sized businesses don’t have an in-house human resources department – but hiring an HR consultant and HR counsel is expensive. A payroll vendor may be able to provide human resources, hiring, and legal support at affordable rates through its partnerships.
If you have questions about outsourcing payroll or any other aspect of planning for your small business, come and chat with your Prospera advisor. We can help your small business grow.
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