View our latest webinar I-9 Overdrive: Amplifying Payroll and HR Compliance on demand!

When is the Right Time to Outsource Payroll?

01-07-2019
Tags: 

My grandparents used to tell stories of when they were young. I’m sure yours did too!  It usually went something like this:  Well when I was young, we didn’t have buses.  We had to strap tennis rackets to our shoes and walk uphill in the snow to and from school each day. Sound familiar?

So we’ve all heard our grandparents' horror stories about school, but what about work?  If you had a grandparent who owned a business, it might have sounded something like this…

Not only did I work tirelessly to open, run, and close the restaurant each day, but every week I would have to pull out the Publication 15 Circular E and calculate each employee’s taxes based upon their wages and W4 status, then write the checks, then deposit my 8109 coupon at the bank and see my CPA once a quarter to file my 941s. 

Wow – it really was that laborious years ago.  The good news is, even if today you are doing payroll “manually,” there are so many software for payroll processing options that helps with the calculations, the government requires electronic depositing, and now you can review the Publication Circular E online.

But is it truly that easy?

Many people ask us, when is the right time to outsource payroll

My answer?  As soon as you hire your first employee!

Now – you may find my answer hasty (and you might also think, well…you work for a company that does payroll so naturally, you would say that), but let me explain.

Top 2 Reasons to Outsource

Compliance

When the IRS has language like this, it's easy for business owners to be just a little confused:

Purpose of Form 941 (taken from The Instructions for Form 941, January 2017, Page 3)

These instructions give you some background information about Form 941. They tell you who must file Form 941, how to complete it line by line, and when and where to file it.

If you want more in-depth information about payroll tax topics relating to Form 941, see Pub. 15 or visit IRS.gov and enter “employment taxes” in the search box.

Federal law requires you, as an employer, to withhold certain taxes from your employees' pay. Each time you pay wages, you must withhold – or take out of your employees' pay – certain amounts for federal income tax, social security tax, and Medicare tax. You must also withhold Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. Under the withholding system, taxes withheld from your employees are credited to your employees in payment of their tax liabilities.

Federal law also requires you to pay any liability for the employer's portion of social security and Medicare taxes. This portion of social security and Medicare taxes aren't withheld from employees.

And that confusion can turn into a huge headache if forms are not filed properly.  There are almost 10,000 federal, state, and local tax jurisdictions in the U.S.!  From federal, state, and local income taxes, to FICA taxes (Social Security and Medicare), to federal and state unemployment taxes, there's a lot that needs to be accounted for and paid.

Then there are the penalties.  Not paying payroll taxes – or not paying them properly – can have some pretty significant negative impacts on your organization when the IRS comes knocking at your door.  Employers may be penalized for failing to file forms, for failing to pay taxes on time, for failing to classify employees correctly, and for failing to provide employees with their W-2 forms by the deadline – just to name a few.

And what about changing laws that can impact your business, particularly when it comes to healthcare?  While any major healthcare bills on the table recently have yet to be passed into law, the federal government regularly releases smaller updates and changes that are still significant, like the recent forms 1095-C deadline extension.

Before you start to panic, consider outsourcing your payroll.  A (good) payroll processing company will have the answers to all your compliance questions – and to those questions, you’re not even thinking of yet.

Time

We live in a world that moves quickly.  As a business owner, your focus needs to be on running and growing your core business – particularly as a small to midsize business.  Forgetting to update your software, falling behind on the latest IRS updates, having a two-person payroll team run payroll for your two hundred-person company…all very real scenarios when you’re trying to juggle payroll along with solidifying your place in the market.

It all adds up to a ton of unnecessary stress for a non-core function of your business, a fact that more and more businesses are beginning to realize.  In fact, analysts at market research firm Technavio forecast that payroll outsourcing will increase by 6 percent year over year from 2017 to 2021.  It seems like business owners are realizing the value of their time!

Related: What to Expect When you go Through a Payroll Transition

Top 2 Reasons to Outsource Immediately

Size

So, you have heard the saying crawl before you walk, walk before you run and so on…

As a small business, you have to learn the ropes as it relates to payroll.  And if you are lucky enough to get the payroll process down (fingers crossed on compliance), you may be able to manage; however, as you grow, there are more and more laws that you have to be aware of – paid sick leave, ACA, and COBRA are just a few examples.

Once you are large enough to have a small HR department, it's hard to focus on the more important jobs like building a culture or recruiting when your HR professionals also need to run biweekly payroll for two hundred employees.

The more employees you have, the more mistakes there will be.  And if we know two things, it’s that being a penny off on a paycheck will guarantee an employee at your door - and incorrect tax filing may result in the IRS knocking at your door.

Complexity

Twenty years ago, outsourcing payroll may have seemed like a nightmare to large organizations or to companies with complex pay situations, like a home healthcare agency or a higher education institution.  In those days, payroll software tended to have one standard system setting – and if it didn't fit your organization's needs, you were sort of out of luck.

The good news is, this is 2018!  Payroll technology has since evolved to handle the complexities of large businesses.  Payroll systems have become more flexible, more personalized, and more complex.  It can take days for a payroll administrator to calculate a complex payroll leaving tons of room for manual error.  We are human, it happens!  Setting errors aside for a minute, changes in wage base limits and special laws (take Paid Family Leave in New York, for example) will ensure that payroll will be changing regularly.  It just isn’t as easy when the variables constantly change.

When all is said and done, for anything you outsource, I pose this question…

If there are people who are better suited for the job, and you have neither time to spare nor interest in learning a function – why wouldn’t you outsource?

Case in point:  From someone who doesn’t know a thing about landscaping, doesn’t own a lawnmower, and doesn’t want to spend all day on a Saturday manicuring a lawn – I outsource!  If you don’t like researching tax law updates, don’t own proper payroll software and don’t want to spend days running payroll – I say outsource!

So you're ready to outsource, but you want to make sure you're asking all the right questions when evaluating a potential new payroll provider?  Check out the 5 Things No One Tells You to Look for When Selecting a Payroll Company.

 


This information is for educational purposes only, and not to provide specific legal advice. This may not reflect the most recent developments in the law and may not be applicable to a particular situation or jurisdiction.

Subscribe To Our Monthly Roundup

Flexible Software Anyone Can Use

Viventium-Logo

By filling out this form, you submit your information to Viventium, who will use it to communicate with you regarding updates and other services.

Overtime Shuffle - Lyrics

Overtime, oh, it’s a complicated game, Different rules in every state, it’s never the same, Multiply by 1.5, but there’s more to see, In this overtime equation, it’s not that easy, you see.

VERSE 1
In the world of work, there’s a tale to be told, About overtime hours, and the payroll gold, A consistent paycheck, that’s the worker’s dream, But when it comes to overtime, it’s not as easy as it seems.

PRE-CHORUS
Oh, Susie worked hard in San Francisco town, But the rules around overtime, they had her feeling down, 42 hours this week, she gave her all, Now it’s time to calculate, let the numbers fall.

CHORUS
Overtime, oh, it’s a complicated game, Different rules in every state, it’s never the same, Multiply by 1.5, but there’s more to see, In this overtime equation, it’s not that easy, you see.

VERSE 2
Exempt or non-exempt, the title they hold, Where they work, where you’re based, it’s all in the fold, California or New York, the laws they diverge, For payroll admins, it’s a never-ending surge.

PRE-CHORUS
Oh, the DOL’s website, a labyrinth to explore, State regulations galore, it’s quite a chore, Staying compliant, it’s a tricky art, Missing out on requirements can break your heart.

CHORUS
Overtime, oh, it’s a complicated game, Different rules in every state, it’s never the same, Multiply by 1.5, but there’s more to see, In this overtime equation, it’s not that easy, you see.

BRIDGE
But here’s a method that can save the day, A payroll software, to keep errors at bay, Input the info right, integrate with ease, No more manual labor, no more overtime fees.

VERSE 3
Back to Susie’s story, she’s owed her due, According to FLSA, it seems we have a clue, $860 on the table, that’s what we’d say, But California’s got its rules, changing the way.

PRE-CHORUS
Oh, California says, hours past eight, Are overtime-eligible, don’t underestimate, Now Susie’s owed $900, that’s the decree, In this overtime puzzle, you gotta set it free.

CHORUS
Overtime, oh, it’s a complicated game, Different rules in every state, it’s never the same, Multiply by 1.5, but there’s more to see, In this overtime equation, it’s not that easy, you see.

OUTRO
So when it’s overtime, and the rules entwine, Choose a payroll software, let it all align, Viventium’s the name, we’ve got the key, To make overtime calculations a breeze, you’ll see.

ENDING
Don’t overwork yourself, don’t you fret, With Viventium by your side, it’s a safe bet, Relax, you’re with us, in this overtime fight, With the right tools in hand, everything’s gonna be alright.

Retroactive Rhythms

Take back time, like a winding clock, Retroactive pay, mending every block. Calculate the hours, with precision and grace, In the world of care, in this payroll space.

VERSE 1
In the world of care, where time slips away, Caregivers dedicate, every single day. But when the hours are missed, in the daily race, Retroactive pay, steps up to embrace.

PRE-CHORUS
A caregiver tired, at the week’s end, Forgot to log hours, a mistake to mend. Admins face the challenge, calculations to make, To set it right, for the caregiver’s sake.

CHORUS
Take back time, like a winding clock, Retroactive pay, mending every block. Calculate the hours, with precision and grace, In the world of care, in this payroll space.

VERSE 2
Manual calculations, prone to a flaw, Dealing with shifts, odd hours, and the law. As your business grows, the cost takes flight, Automated solutions, shining bright.

PRE-CHORUS
Compliance is key, with FLSA’s might, Calculate and compensate, get it right. Avoid the audit’s gaze, fines and the cost, Retroactive pay, no longer lost.

CHORUS
Take back time, like a winding clock, Retroactive pay, mending every block. Calculate the hours, with precision and grace, In the world of care, in this payroll space.

BRIDGE
Employee satisfaction, a crucial part, Resolve mistakes, a work of heart. Relationships flourish, in pay’s embrace, A payroll software, creating a trace.

VERSE 3
Star caregivers, valued and strong, Retention and recruiting, where they belong. Automated solution, a total pay dance, Establish your business, a work-life romance.

PRE-CHORUS
A self-winding watch, Viventium’s grace, Optimizing payroll, in every case. No more struggles, in the payroll game, In it with you, time and time again.

CHORUS
Take back time, like a winding clock, Retroactive pay, mending every block. Calculate the hours, with precision and grace, In the world of care, in this payroll space.

OUTRO
As your business grows, in the hustle and fight, Viventium by your side, making it right. No more worries, in the payroll chain, In it with you, time and time again.

In the Arms of Geo Tax - Lyrics

Geo Tax, oh Geo Tax, our savior in the night, Guiding us through tax laws, shining a bright light. No more payroll worries, no more sleepless nights, With Viventium’s help, we’ll be alright.

VERSE 1
In the world of business, we all aim to thrive, Year after year, our dreams taking flight. But as we soar higher, we start to see, More money, more problems, just like B.I.G. Outgrowing our shell, it’s an exciting phase, But it brings with it some challenging days. Solutions we had, now show their flaws, As we push the boundaries, breaking through the walls.

CHORUS
Geo Tax, oh Geo Tax, our savior in the night, Guiding us through tax laws, shining a bright light. No more payroll worries, no more sleepless nights, With Viventium’s help, we’ll be alright.

VERSE 2
Employees across states, in different localities, Tax laws aplenty, creating complexities. Our old software’s limits, we’ve begun to see, Scaling up our business, we need to break free. Calculating pay and taxes, where it all begins, Errors in this process, lead to countless sins. Employees rely on us, trust in our might, To withhold what’s needed, get it just right.

CHORUS
Geo Tax, oh Geo Tax, our savior in the night, Guiding us through tax laws, shining a bright light. No more payroll worries, no more sleepless nights, With Viventium’s help, we’ll be alright.

BRIDGE
Taxes, they’re not simple, that’s for sure, A world of complexity, there’s always more. But Viventium stands with us, in this fight, Geo Tax, our ally, making everything right.

VERSE 3
CPAs may struggle, and admins too, Keeping up with taxes, what can they do? The rules keep changing, it’s hard to keep pace, But Viventium’s here, in this challenging space.

CHORUS
Geo Tax, oh Geo Tax, our savior in the night, Guiding us through tax laws, shining a bright light. No more payroll worries, no more sleepless nights, With Viventium’s help, we’ll be alright.

OUTRO
So relax, dear business, and set your mind free, With Geo Tax on our side, we’re the best that we can be. Viventium’s got us, in this tax-filled fight, No more worries, no more sleepless nights.

REPEAT CHORUS
Geo Tax, oh Geo Tax, our savior in the night, Guiding us through tax laws, shining a bright light. No more payroll worries, no more sleepless nights, With Viventium’s help, we’ll be alright.

Payroll Grid Serenade - Lyrics

Configurable Payroll Grids, a helping hand in sight, In the realm of admin life, where details are rife. With custom views and filters, they navigate through the night, Let’s celebrate this feature, it’s the heart of our work life.

VERSE 1
In the world of admin tasks, where changes often arise, There’s a tool that’s been a savior, under office fluorescent skies. With flexibility and precision, it eases their daily strife, Let’s sing about this feature, it’s the pulse of our work life.

CHORUS
Configurable Payroll Grids, a helping hand in sight, In the realm of admin life, where details are rife. With custom views and filters, they navigate through the night, Let’s celebrate this feature, it’s the heart of our work life.

VERSE 2
Admins wear many hats, in their daily grind, Sometimes they need to adjust, leave no errors behind. Adding extra hours, bonuses, or fixing pay, They need a simple method, to make it all okay.

CHORUS
Configurable Payroll Grids, a helping hand in sight, In the realm of admin life, where details are rife. With custom views and filters, they navigate through the night, Let’s celebrate this feature, it’s the heart of our work life.

BRIDGE
Custom views and filters, tailor it to your need, Focus on the important, no need for needless speed. A hundred-dollar bonus, a few clicks and it’s in flight, Admins get it done, making sure it’s right.

VERSE 3
In the admin’s world, where numbers have their say, This tool steps in gracefully, making tasks less gray. An interface so intuitive, like an Excel sheet, Changing data effortlessly, making work complete.

CHORUS
Configurable Payroll Grids, a helping hand in sight, In the realm of admin life, where details are rife. With custom views and filters, they navigate through the night, Let’s celebrate this feature, it’s the heart of our work life.

OUTRO
So here’s to Payroll Grids, in our song of praise they gleam, For admins working diligently, they fulfill a dream. In the world of office hustle, they bring much-needed light, Let’s tip our hats to this tool, and its invaluable might.

Automation Anthem - Lyrics

Rule-Based Automation, it’s the name of the game, Less manual toil, less stress and shame, With policies and standards, we’ll pave the way, To automate your chores and brighten your day.

VERSE 1
In the world of payroll, a daily task we face, Admins work hard, in this complex space, They handle policies, with attention and care, But there’s a solution that’s beyond compare.

PRE-CHORUS
Oh, payroll admins, your role’s crucial and true, But there’s a tool we’ve got, just for you, Let’s explore rule-based automation, my friend, With Viventium, your tasks will gently mend.

CHORUS
Rule-Based Automation, it’s the name of the game, Less manual toil, less stress and shame, With policies and standards, we’ll pave the way, To automate your chores and brighten your day.

VERSE 2
Standardize policies, that’s the key, For tenure, role, union status, you’ll see, PTO, bonuses, pay rates defined, Automation makes your workload more aligned.

PRE-CHORUS
Oh, payroll admins, the burden’s a load, But rule-based automation lightens the road, No more tiresome chores, no more dread, With Viventium, it’s smoother ahead.

CHORUS
Rule-Based Automation, it’s the name of the game, Less manual toil, less stress and shame, With policies and standards, we’ll pave the way, To automate your chores and brighten your day.

BRIDGE
In the world of payroll, where tasks repeat, We’ve got the solution, it’s oh so neat, “If this, then that,” it’s simple and sly, With Viventium by your side, you’ll reach for the sky.

VERSE 3
Tenure-based PTO, a common request, With Viventium, it’s passed the ultimate test, Set it up once, and then you’ll see, Automation handles the chore, oh so free.

PRE-CHORUS
Oh, payroll admins, take a breath, take a pause, With Rule-Based Automation, you’ll find no flaws, It’s easy, it’s simple, no programming in sight, Viventium’s got you covered, day and night.

CHORUS
Rule-Based Automation, it’s the name of the game, Less manual toil, less stress and shame, With policies and standards, we’ll pave the way, To automate your chores and brighten your day.

OUTRO
So if you’re a payroll admin, feeling the weight, Let Viventium’s Rule-Based Automation be your fate, No more worries, no more strife, With Viventium, you’ll transform your work life.

The Data Groove - Lyrics

Oh, the Report Library, it’s the heart of the show, Where numbers come alive and insights start to flow. With Viventium’s aid, it’s a breeze, can’t you see? Reporting made easy, for your company to be free.

VERSE 1
In the world of business, it’s a complex game, With factors and figures, it’s never the same. Decisions are key, they’ll determine your fate, So listen up closely, don’t be a bit late.

PRE-CHORUS
Gather your data, don’t let it fade, In the depths of spreadsheets, don’t let it cascade. Your HCM software, is it up to the task? To capture and store, to help you unmask.

CHORUS
Oh, the Report Library, it’s the heart of the show, Where numbers come alive and insights start to flow. With Viventium’s aid, it’s a breeze, can’t you see? Reporting made easy, for your company to be free.

VERSE 2
Once the data’s collected, it’s time to report, But it can be daunting, that’s the common retort. Pre-built solutions, they’re your guiding light, Turning raw data into visions so bright.

PRE-CHORUS
No more manual hours, no errors in sight, With report library’s might, everything’s right. Payroll summaries, tax liabilities, and more, All in a flash, you’ll have what you adore.

CHORUS
Oh, the Report Library, it’s the heart of the show, Where numbers come alive and insights start to flow. With Viventium’s aid, it’s a breeze, can’t you see? Reporting made easy, for your company to be free.

BRIDGE
Viventium’s here, with a passion so true, Constantly improving, for folks just like you. A Report Library, a gift from the stars, For data-driven dreams, it’ll take you far.

CHORUS
Oh, the Report Library, it’s the heart of the show, Where numbers come alive and insights start to flow. With Viventium’s aid, it’s a breeze, can’t you see? Reporting made easy, for your company to be free.

OUTRO
So remember this lesson, in the business terrain, It’s all ’bout decisions, don’t let ’em wane. With data as your guide, and Viventium’s grace, You’ll conquer the challenges you’ll face.