Deciding whether to process payroll in house or outsource it is never an easy decision. Most accounting software packages offer a payroll module, but outsourcing this service may prove to be a sound business decision. For example, the company may lack resources, expertise, or outsourcing may be more cost effective.
If payroll is outsourced, an employer must still compile the hours for the hourly employees, make sure the employee information is accurate and set up with the correct information. The task of gathering this information can get complicated, especially if labor is tracked by jobs or departments. Additionally, an employer also has to make sure that all deductions are set up correctly for insurance, garnishments, pensions, etc.
Some payroll outsourcing services require that you enter this information into the payroll provider’s software while others; obtain this information via a phone call. If payroll is keyed into the payroll provider’s software, an employer can just as easily process the payroll in the accounting software. The payroll provider is basically being paid to deposit taxes, cut checks, deposit direct deposit checks and print the payroll register. Those are the tasks that are the basic part of the payroll process. The most time consuming part of payroll processing is gathering and entering the hours.
This brings us back to the main issue – does the expertise exist in house to make sure all the payroll taxes are taken care of? When an employer opts to outsource payroll, all the employer has to do (after compiling hours) is to ascertain there is enough money in the bank account to fund each payroll. If an employer doesn’t have an accountant or experienced payroll preparer, the fines and penalties for not making timely deposits can pay for the payroll processing. For instance, if 941 tax deposits are deposited over 16 days late; a penalty of 10% of the total tax due can be assessed (for more information see Circular E at (www.irs.gov). Each withholding or unemployment tax has its own deposit schedule and tax form that has to be filed quarterly.
Another important factor that determines whether or not to outsource payroll is cost. Outsourced payroll costs are determined by the number of employees and type of services utilized.
Sage Accpac ERP users now have the best of both worlds with Sage Payroll Services. The Sage Payroll Service seamlessly integrates with Sage Accpac. It offers direct deposit (no additional cost), payroll tax compliance and best of all, flows through to your GL with no duplicate entry. If you just need assistance with payroll tax compliance, you can just use that part of the service.
There are many different options for outsourcing payroll; online services, traditional services, and now Sage Payroll processing. If you are thinking of outsourcing all or part of your payroll, get more information about Sage Payroll Processing and see how it can benefit your business. Contact us at firstname.lastname@example.org.