So many people make the mistake of managing their payroll themselves or hiring someone specifically for this function. Managing your payroll on your own is something you should only consider if you have one or two employees or if you’re running a major operation. Unless you fit into one of these two categories, going with in-house payroll management is probably a bad decision. Let’s take a look at a few reasons why managing your payroll is usually not a good choice for small and medium organizations.
You’re Bound to Make Errors
It doesn’t matter how good you are at managing payroll. Unless you have an actual accounting background, there is a strong chance that you’ll miss something at some point. It may not even be a calculation error. You might not be aware of a recent change in tax laws, or not know that your business may have new reporting requirements and obligations because of changes you have made.
Some industries are more tightly regulated than others and have very complex rules regarding the use of subcontractors or staff numbers, for instance. One mistake here could cost you a lot of money and land you in legal trouble. This isn’t something you’ll have to worry about if you pick a reputable payroll company with lots of expertise dealing with your industry.
It’s a Waste of Time and Money
Managing payroll takes a lot of time and resources away from your business. If you are handling it on your own, you are wasting time and energy on a non-profit-producing task. This is energy that you could have directed towards marketing and improving your operation.
The worst thing you could do in our opinion is hire someone to handle payroll, even if they handle other things like accounting and bookkeeping. There are HR and payroll companies that will virtually handle your whole back office and allow you to concentrate on what you know and do best. You won’t have to pay someone to pretend to be busy for most of the day either.
You May Get Overwhelmed
If your goal is to grow your business and you feel like your current setup works, you might be surprised at how fast things can change and the pressure rapid expansion can put on your payroll function.
Payroll services can grow with you and if you hire one now, you won’t be blindsided if demand suddenly explodes. It’s not just that you may have to hire more employees, but as we said earlier, rules might become very different as you expand to more markets and your structure becomes more complex. Hiring a service now will prevent you from having to scramble for solutions at the last minute.
Managing your payroll in-house is rarely a good solution for small to medium businesses. If this is what you are doing right now, you should consider your options and think about working with an expert third-party team.