Whether you’re opening a new laundromat or you’re looking to streamline your administrative and bookkeeping operations, having an efficient payroll system is a crucial part of any business. One of the biggest questions is whether a firm should perform the associated responsibilities in-house or outsource them. By learning more about these two different options, companies can increase their chances of making an informed decision.
Unsure whether it’s time to outsource your payroll operations, or keep everything in-house? Below are a few key considerations to keep in mind as you weigh the pros and cons of using a third-party provider to handle your laundromat’s bookkeeping.
Processing payroll internally can be expensive
It’s important for laundromat owners to keep in mind that maintaining payroll operations internally can create significant expenses, and for new businesses, this could be too much of a burden to shoulder.
Payroll is a major expense for small and fledgling companies. Internal payroll systems can lead to substantial labor costs and involves a number of tasks. Workers within the payroll department will need to track benefits, 401(k) plans and automatic paycheck deductions for other staff.
Internal payroll operations may be more at-risk for tax issues
Companies looking to reduce the risk of penalties from the Internal Revenue Service may want to explore the benefits of using a third-party vendor. Firms that have expertise in this area may be more likely to meet all deposit requirements and filing deadlines, thus minimizing risk. Because a payroll vendor tasked with performing essential payroll processes assumes compliance risk to the vendor, these companies are responsible for complying with existing rules and regulations and keeping up with the current state and federal regulatory framework for taxation in ways that an actual small business may not, once payroll has been outsourced.
The benefits of using a third party
Businesses on the fence about whether or not to outsource payroll should keep in mind the advantages that come with working with vendors.
There are a number of other reasons why small businesses choose to outsource their payroll operations. For one thing, it can be more affordable – it can also mean having access to more efficient software and technology resources, and streamlining operations while reducing the potential for risk.
In terms of technology and costs, businesses that have their payroll handled by an outside service provider can potentially lower their technology expenses because they won’t have to pay for software, servers and other technology infrastructure. In addition, these companies won’t have to worry about making system upgrades down the road. To take advantage of software offered by third-party vendors, business owners should make sure that vendors adhere to the Electronic Federal Tax Payment System. Companies can verify any tax payments that are made by the third parties if these service providers are leveraging EFTPS.
But also, business owners should keep in mind that companies specializing in payroll services may be more reliable. Vendors hire trained professionals who specialize in exclusively in bookkeeping and payroll services, and have the exact expertise and experience businesses can count on. Alternatively, small businesses with less resources that choose to do payroll in-house may constantly be struggling to keep up with day-to-day operations.
Working with a vendor can often mean fewer headaches and hassles for small business owners. And because these vendors specialize in payroll services, they may have access to more payment options than a company does, meaning they can offer payments to staff via check or by direct deposit. This can help solve problems that arise when employees do not have a bank account set up, or when paychecks are sent to the wrong place.