For those companies that are still handling payroll in-house, they may find it to be a very costly and time consuming process, which would make it worth their while to outsource this and focus on more strategic matters. According to the latest data, 58 percent of companies with fewer than 500 employees choose to outsource payroll. This is likely because these small to mid-size businesses lack the staff, time, and expertise to handle payroll adequately.
On the other hand, outsourcing payroll administration to a third party can sometimes be even less cost-effective depending on the vendor. For example, if you're partnering with one of the larger payroll processors, you may be paying for services that you don't actually need.
It's important to note that there are some scenarios when it makes sense to continue to handle payroll administration in-house. Some examples of this would include if a company's payroll was too complicated for most payroll vendors' standardized systems or if a company has the financial means and resources to afford their own in-house payroll staff.
A great solution to consider for small to mid-size employer groups is to partner with a professional employer organization (PEO). In addition to handling payroll administration, PEOs can allow you to outsource many other HR components of your business such as employee benefits and workers compensation so that you can focus on your core business model.
With a PEO, the services such as handling payroll, employee benefits, and workers compensation often are sold in a bundle. However, some employer groups (especially those that fall into the mid-size category) may find that it's more cost-effective to "unbundle" the services that they are getting from a PEO.
When you choose to outsource these key HR components to a PEO, payroll processor, or third-party vendor, a major benefit for your business is the overall HR compliance that you will gain and the reduced liability that your company will have.
At Summerlin-Roberts, we feel that it's our duty to evaluate the processes that you've had in place for an extended period of time, whether it's a long-time PEO arrangement, a partnership with a payroll processor, or handling these critical HR components in-house. We'll take a careful look at these processes to determine if they are the most economical and efficient solutions for your business and, when appropriate, provide you with cost-saving recommendations.
Please contact us at Summerlin-Roberts to discuss payroll administration in further detail and learn about some potential solutions to improve your current HR processes.