One of the main contributing factors for high employee job satisfaction has continuously been compensation payment, says a Society of Human Resource study. Workers feel fulfilled and motivated when their efforts result in tangible, monetary, rewards. However, payroll administration for a small business can be time-consuming, costly, and riddled with regulations and deadlines. As a result, a growing number of companies are outsourcing payroll services in order to reduce payroll error risks, stay in compliance, and to keep employees focused on core competencies as opposed to administrative tasks. Payroll administration is a pillar of the Professional Employer Organization service offering, which can include a broad range of payroll related services ranging from personalized payroll reports to a robust HRIS system. These tools provide a one-stop-shop to ensure efficiency and compliance.
Why does having an accurate payroll service matter to your company?
One of employees’ greatest expectations is to be paid appropriately and punctually; as a result, the problems and costs of not paying an employee correctly can be great. Since the changes in the Fair Labor Standards Act (FLSA) in August 2004 allowed for opportunities to increase wage violation claims, payroll examinations and lawsuits have also increased. A non-compliant business must be able to provide accurate records of wages from as far back as three years, or face high fines, legal sanctions and owed back pay. PEOs constantly stay abreast of these regulation changes to ensure that their client companies’ payroll management is compliant.
What specific payroll services can a PEO provide?
Payroll services vary accordingly with each individual PEO. However, common services provided often include, but are not limited to:
- *24/7 access to a web based payroll platform and Human Resources Information System (HRIS)
- *Employment tax processing and payments
- *Preparation and delivery of W-2 forms
- *Bonus & Commission tracking and processing,
- *Paid Time Off (PTO) tracking
- *Customized reports such as employee data, job costing, standard payroll, billing and human resources reports
- *Specialized payroll consultation, data analysis and strategic compensation plan development
What are some benefits of outsourcing payroll administration to a PEO?
As a business owner, outsourcing your payroll management allows you to have one less thing to worry about, along with many of the following benefits
- *Reliable, accurate and time-efficient payroll data entry
- *Reassurance that your payroll taxes and required legal forms are compliant with federal, state and local regulations
- *Having your company’s payroll details backed up by an outside source
- *Organized and transparent records of wage payments, incentive plans, and pay rules
- *Comprehensive reports to help you gain insight on your business and employees’ growth
- *Reduced likelihood of employee fraud and wage violations
- *Ability to track and measure your pay programs and compensation strategies towards your goals
When should a company begin to consider outsourcing payroll administration to a PEO?
There are a variety of reasons why companies use PEO payroll services and specialists. Below lists several common situations
- *Limited resources: Whether it’s a company preferring to utilize their internal HR staff for other duties instead of tedious payroll keeping, or a small business without HR employees, many companies will outsource payroll functions to save resources.
- *Need for a payroll strategy: PEOs are able to provide in-depth and specialized compensation planning for a company. Many PEOS offer comprehensive payroll services, including strategies to establish a competitive wage rate to retain employees and analysis of a business’s productivity versus salaries.
- *Inexperience: Payroll administration is composed of much more than simply paying wages. Companies must also make sure their compensation management adheres to tax and compliance standards, accurate record keeping and knowledgeable reports, meaning either additional skill training for internal employees or the choice of employing a PEO.
Outsourcing payroll responsibility to a PEO can allow a business to utilize its time and employees much more effectively. Many Professional Employer Organizations have the expertise, experience and reliability to not only provide, but also protect their client companies’ payroll administration services. PEOs can offer data analysis, strategy development and payroll planning that best suits your business. The payroll services a PEO can provide, along with its resulting benefits, are important things to take into consideration when making a decision on a business’s payroll administration.