HR matters are an essential part of running any business but can also add significant complexity and costs. They often involve time-consuming administration like filing tax documents and I9 compliance, tracking employee records, managing training, and developing engaging policies and procedures. HR and payroll outsourcing may help alleviate many of these concerns for small businesses. Here are a few advantages of doing so:
Saves Time
In the modern era, where speed is critical to success, outsourcing HR functions makes sense. It saves business owners time, money, and frustration by allowing them to focus on more pressing matters.
Human resources are responsible for a lot of data—employees’ Social Security numbers, tax identification numbers, addresses, policy information, contact information, and more. It’s essential to safeguard this data and have a backup plan in case of a disaster, such as a computer crash or hacking. HR and payroll outsourcing firms are well-equipped to manage this data for you and provide secure cloud-based solutions.
Having an in-house HR team is a significant expense, especially as your company grows and adds employees. Managing payroll, complying with laws and regulations, staying on top of trends in employee relations, and implementing new processes can be daunting for small-to-mid-sized companies without dedicated human resources personnel.
By opting for HR and payroll outsourcing, a company handles all aspects of your payroll checklist—time-tracking, benefit deductions, payroll tax filing, reporting, and more. This allows you to focus on the day-to-day operations of your business while ensuring you’re compliant with the law and following best practices. HR and payroll outsourcing also provides access to world-class technology that you wouldn’t be able to afford on your own. This enables you to attract top-tier talent and compete with larger businesses in your industry.
Saves Money
Having an in-house HR department is expensive. An average salary for an HR manager alone can cost your business more than $78,000 per year. And if you have to pay for additional human resources staff to handle payroll, workers’ compensation, and employee benefits, you can expect your costs to skyrocket.
Outsourcing your HR functions to a professional employer organization (PEO) can save you a lot of money. A PEO is a company that enters into joint employment with your business to provide a wide variety of services. These include workers’ comp, insurance, risk management, and administration of employee benefits programs. In addition, they have the expertise to ensure strict compliance with employment laws and thorough recordkeeping, which can help defend your business against lawsuits.
Companies that specialize in payroll processing can also save your business a great deal of money by identifying potential errors and ensuring the accuracy of your payroll. These companies may also be able to help you avoid costly mistakes such as misclassifying employees as independent contractors, a common mistake that can lead to massive fines for your business.
In addition, many HR and payroll outsourcing providers offer a range of other cost-saving services. These can include seamless open enrolment and integrated employee benefits administration, streamlined applicant tracking, and assistance with developing engaging new-hire onboarding experiences.
Increases Efficiency
HR outsourcing offers a number of different benefits for businesses in the modern era. From payroll processing to workers’ compensation, there are many functions that a business can outsource. These services help a company save money and stay compliant with state and federal laws. For example, a professional HR service provider will be able to process payroll efficiently and seamlessly every pay period. They will also help a company manage time tracking, benefit deductions, payroll tax filing, and reporting.
In addition, HR and payroll companies can help a company hire the right talent by filtering resumes based on keywords and conducting extensive online job posting. They can also assist with employee training and onboarding, making sure new employees are ready to take on their roles.
Many businesses find that they need additional support for the most complex aspects of their HR function with Secure data storage. For example, they may need to update policies and procedures to reflect the company’s unique culture or comply with changing laws. An external HR service provider can help a company create an employee handbook and develop other tailored policies and procedures.
HR and payroll outsourcing can be a great option for businesses that need to free up resources in order to focus on core business functions. Hiring in-house can be expensive and often results in the loss of productivity in other areas of the company. Choosing to outsource these non-core functions can save your business money and give you the peace of mind that comes from knowing a trusted partner is taking care of important human resource matters.
Reduces Risk
As a business owner, you already have a lot on your plate. Trying to keep up with the changes in federal and state labor laws along with managing your many different vendor relationships (payroll, employee benefits broker, workers’ compensation broker, 401K provider, third party administrators) can be a full-time job. HR and payroll outsourcing frees up your time to focus on more strategic initiatives that can help you grow your business with Secure data storage.
A good HR outsourcing partner will also be up to speed on the latest technology. They’ll offer a seamless transition to their platform that will allow your team to continue working as usual, with minimal disruptions. This means you’ll have close to zero system downtime, a consumer-like user experience, and a streamlined payroll process that enables employee self-service across all functions.
If your in-house HR team is spending the majority of their time on data input and forms processing, it’s a sign that you need to consider outsourcing some or all of your HR functions. HR and payroll outsourcing can provide a comprehensive solution that includes in-depth HR guidance and compliance, payroll management, tax administration, and more. They can also provide full-cycle recruiting, a co-employer model with a single point of contact, worker’s comp insurance, and comprehensive employee benefit plan options with competitive pricing.
Lastly, HR and payroll outsourcing can reduce your risk as a small business in the modern era of increased litigation and regulatory scrutiny. Even one misstep can have devastating effects, not only for your brand but also for your bottom line. An experienced HR and payroll partner can help you navigate the risks of your company’s unique workforce and mitigate those through compliance, best practices, and risk mitigation strategies.