Payroll tax management is a complicated task with high stakes. Making an error can become a major record-keeping setback for a company and failing to pay taxes correctly may result in enormous fines from the IRS.

For most companies, there are very few reasons to manage payroll in-house, and payroll is one of the most commonly outsourced tasks. Here are just a few of the advantages of outsourcing payroll.

Four Reasons to Outsource Payroll

  1. Outsourcing ensures accuracy.
    Companies that specialize in payroll services generally guarantee their work will be accurate. Accurate returns are critical for employee satisfaction, company record keeping, and, most importantly, for avoiding costly penalties from the IRS. Unlike in-house HR departments, payroll management firms are wholly focused on keeping up-to-speed on the latest compliance requirements for federal, state, and local taxes.
  1. Outsourcing saves time.
    Just how much time does it take for a company to do their own payroll taxes? Well, first, there is calculating the withholding amount for each employee individually, then filing the correct form with the IRS for each one. Depending on the size of the company, it may then need to make deposits every month or even every two weeks to the IRS. Then, all that information must be recorded for the IRS and each employee’s W-2 every year.To put it more succinctly, payroll taxes are very time-consuming. Sending this immense task off to an industry expert can free up an entire department.
  1. Outsourcing saves money.
    As mentioned above, payroll taxes take up a lot of time. If payroll is done in-house, that’s time to which a company must pay an employee. Even the best HR managers can often find themselves burning unnecessary hours on a complex aspect of payroll. This is often time they could productively use doing something else.Relying on an overworked HR department can also result in costly mistakes. These mistakes must be corrected, using even more company time, and the errors can sometimes result in fines from the IRS.
  1. Outsourcing frees up resources.
    HR departments serve many important functions in a company. Bogging these departments down with complicated tax calculations isn’t going to push a company forward. By outsourcing payroll, HR departments are free to put their focus on other areas of the business.

To learn more about how outsourcing payroll taxes can help your company, contact LBMC Employment Partners today.