I always recommend outsourcing payroll. Yes, it will cost you about $50 to $150 per payroll (depending on how many employees you have), but this might be some of the smartest money you spend. Yes, I know that you would rather spend the $2,000 to $3,000 on a nice vacation. But trust me, the following benefits of outsourcing far outweigh the cost.
- Outsourcing makes your accounting simpler. Processing payroll is one of the more complicated areas, even using QuickBooks. Letting either ADP or Wells Fargo Payroll handle it (my clients have had good luck with both of these companies) makes this headache someone else’s problem.
- Outsourcing eliminates the errors. Like I said, payroll is complicated and there are so many rules constantly changing that can trip you up. Making just one mistake can cost you thousands of dollars. About half of the clients that I train to do payroll using QuickBooks end up outsourcing it once they receive that first penalty notice.
- Outsourcing ensures that your payroll taxes are paid on time. About 80 percent of the companies that I have to send to a bankruptcy attorney were behind on their payroll taxes. The firm you outsource to will take out payroll taxes every pay period. Now I have had business owners who say they can’t outsource because they don’t have the money. My answer is that not paying your payroll taxes is a dangerous temporary cover-up of another problem that you need to fix now. The longer it takes you to fix that problem, the more trouble you will find yourself in.
- Outsourcing eliminates your bookkeeper’s annual raise. Many business owners have had their bookkeepers approach them asking for a raise because some other idiot in the office is making more than they are. When you outsource payroll, no one but you knows what others in the office are making.