It is no surprise that almost every small business owner at some point in their careers considers doing their payroll on their own. They have dreams and aspirations of easily processing their payroll for a few reasons. This may include wanting to save money or being determined to learn a new skill.
However, most of the time, this is not always in the best interest of a small business owner. It rarely goes according to plan. When attempting to complete their payroll on their own without the help of a business, such as PaySmart, that specializes in small business payroll, they often make errors. What starts out with good intentions of saving money can wind up resulting in more time completing the work than they would have if they just outsourced it.
Unfortunately, there are also risks and costs associated with small business owners attempting to do their payroll themselves. There is more to payroll than most are aware of.
Here are Six Downfalls of Independently Processing Payroll as a Small Business:
1. Spending copious amounts of time.
One risk and cost small business owners are sure to experience when doing their own payroll is wasting valuable time. Too often today, small business owners struggle to accomplish their daily tasks in the time they are given. Payroll is that one extra task that deserves attention. This diverts their attention from accomplishing the tasks that will help them ensure their businesses continue running successfully. Therefore, small business owners should outsource their payroll to a provider, like PaySmart, to ensure they can focus their attention on what matters most.
2. Making minor errors.
Small business owners also must be careful not to make minor errors when completing payroll. These errors may involve misspelling a name or inputting an incorrect address. While they may seem small, they greatly affect the ability of a business’s payroll tasks to be completed successfully. Therefore, small business owners may waste a large amount of time trying to identify and then fix these minor errors. Unfortunately, these small errors may be a bigger hassle for small business owners than they are worth.
3. Making major errors.
When attempting to process their payroll, without a payroll provider, small business owners must also be cautious not to make major errors. These may include paying someone the wrong amount, submitting a paycheck to the wrong employee, or processing a paycheck twice. These big errors can cost small business owners not only a large amount of time but also money. Unfortunately, many cannot afford to make these kinds of errors. Therefore, the risks and costs associated with independently processing their own payroll may not be worth it to many small business owners.
4. Failing to catch errors.
Another risk and cost small business owners should be aware of when they complete their own payroll is the possibility that they may fail to catch the errors they made when doing so. This can be extremely detrimental to them and their businesses. If they continue to process their payroll incorrectly, the errors they made may begin to compound. Thus, making a bigger and bigger problem for them each time a payroll action is completed. If small business owners continue to pay employees at too high of a rate, for example, and this goes on for many months, employees may end up owing them money at the year’s end. This is a difficult and uncomfortable situation that small business owners should not have to deal with. Therefore, it is often easier and safer for them to outsource their payroll duties. PaySmart specializes in small business payroll.
5. Having to reissue important documents.
When small business owners complete their own payroll, they may also risk spending time and resources reissuing important payroll documents if they make an error when completing them. These documents, such as W-2s, are extremely important to ensure employees are able to complete their taxes correctly and on time. If a small business owner spells an employee’s name wrong or accidentally lists the wrong address on the document, they will have to reissue these documents as W-2 Cs. This is a time-consuming process for small business owners and the employees waiting to receive them. Therefore, small business owners must take immense care when completing payroll documents. This ensures they are done correctly the first time.
6. Being held legally liable.
Another risk and cost associated with small business owners doing their own payroll is being held legally liable for any errors they make. If they withhold the improper amount from an employee’s paycheck for taxes or pay them too much or too little, it can affect the ability for them to do their business’s taxes and for their employees to do their own taxes as well. If they complete their taxes incorrectly, the IRS may audit them and take further legal action against them. Furthermore, they may do the same thing to employees who file their taxes incorrectly. Withholding local taxes is no easy task. It is one that is often done incorrectly and could cause problems. Therefore, small business owners may opt to outsource their payroll duties to a small business payroll provider to avoid any unnecessary legal liability.
While many small business owners may aspire to do their own payroll, it is not always worth their time and effort. Unfortunately, payroll can be a confusing process. Small business owners may spend more time figuring out how to do different tasks and fixing their errors than actually completing the work. Therefore, unless small business owners have a background in payroll, it may be better for them to outsource this process and the duties associated with it. Many small businesses are surprised that the costs are rather reasonable and outweigh the benefits of going it alone. When they do, they will save time and be able to focus their attention on running their businesses successfully.
PaySmart is a payroll provider located in Mechanicsburg, Pennsylvania, supporting small businesses in the Central PA region. We are dedicated to helping small businesses take care of their payroll needs. To learn more information about how PaySmart may provide payroll solutions, please get in touch with us at 717-766-1777. Our New Client Concierge is waiting for you!