Outsourcing payroll is right for some businesses

Businesses small and large trying to reduce expenses should weigh the option of payroll outsourcing. Such alternative payroll processing allows employers to cut costs and direct actions to other day-to-day needs, writes John Edwards for HRWorld.

Rather than hiring a full-time payroll manager, outsourcing provides a reliable alternative that allows companies to direct capital to a third party without paying the salary and benefits of additional employee.

There are tangible reasons for such a course, Edwards continues. In-house payroll opens greater potential for errors by the employee or owner. Outsourcing, conversely, can limit the risk of erroneous payroll process and increase a company's effectiveness, particularly in very small businesses where the entrepreneur may handle all the payroll responsibilities.

With outsourcing, companies will receive timely accounting and distribution of paychecks, tax filings and other record-keeping. Outsourcing will also decrease the need for the company to be up-to-date on all current federal and state tax laws.

Lastly, payroll outsourcing is a very secure means to organize a business' finances without the risk of sensitive information being exposed. The hired firm provides businesses with umbrella-like protection.

A survey by the Ponemon Institute last summer revealed that companies lose an average of $3.8 million per year to cyber crime and other forms of business identity theft.

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