When you first start a business, processing payroll seems to be the easiest task that you will have to perform. If you are currently reading this, then you have probably come to the conclusion that payroll is a process that involves more than simply paying employees. Trying to do payroll on your own can take up a lot of mental bandwidth. So, if you feel as though you are ready to outsource your payroll, the following are some signs that now may be the time to hire a bookkeeping company to manage it for you.
It probably goes without saying that most of your employees do not have a lot of breathing room when it comes to their finances. In fact, reports from the Federal Reserve estimate that over 40% of households in the United States do not have the funds available to cover an unexpected $500 expense.
This means that if you are late running payroll, this can not only mess up their lives, but it can also destroy any credibility and trust you have established as an employer. So, if a bank holiday will throw you off from processing payroll on time, or it slips your mind, consider outsourcing the job to a payroll service.
Missing Tax Deadlines
In the majority of states, small businesses have to make at least eight separate payroll filings annually. These filings include state filings and quarterly filings of the IRS Form 941. Making sure these filings are processed on time is another task that can be forgotten by small business owners. Filing late and/or making late deposits can become costly over time.
Cash Flow Issues
Even small businesses that are successful can occasionally experience cash flow problems. If your business goes through seasonal cycles of ebbs and flows, or you have a major one-time expense, your budget may be destroyed. Whatever your specific problem is, a bookkeeping or payroll service can help you manage your cash flow in several ways such as:
Withholding the taxes for payroll so you do not have to come up with the money at once
Paying your employees through direct deposit
Providing you with accurate payroll data so you are able to make better projections for cash flow
This is list is by no means complete, but it should provide you with a few red flags that you should be on the lookout for. Simply put, an experienced and professional bookkeeping service will give you more time to focus on other areas of your business while minimizing risks that could occur from you doing payroll on your own.