When Choosing Between Payroll Accounting Software and Outsourcing – Consider Things
Every business starts with User Basic Accounting Software. We inspire to be the number 1 integrated business solution provider and also aim to deliver cost effective solutions to the customers.
Skillset
If you don’t have payroll processing skills on staff already, that can be a pretty compelling reason to start your evaluation leaning toward outsourcing.
Payroll processing accounting software involves a number of different discrete tasks. It’s more complicated than simply making base calculations and cutting checks. While employees involved in payroll processing might not need a Harvard business degree, at minimum they will need to know how to:
file quarterly reports,
ensure withholding payments are made,
keep up with state and federal deadlines,
issue W-2 forms,
manage federal unemployment tax, and
submit I-9 employment eligibility verification forms.
At many companies, payroll accounting software can be even more complex. PTO accruals, pension and health care deductions, wage garnishments, overtime or commission calculations, and direct deposit enrollments are all common elements of managing payroll.
It’s also worth thinking about whether or not your organization has the technical resources for deploying the software, integrating it with any software it will need to communicate with (time & attendance or job cost software, for instance), and managing software version updates. If you need to rely on a software provider for these services, that can add another line item to the bill. That being said, there is another option. One of the reasons that software-as-a-service solutions are gaining in popularity is because they transfer the management of the hardware and software maintenance to the provider.
Risk tolerance
Every business wants to minimize risk. The risk management element of determining whether to outsource payroll is an important part of the decision.
One of the more attractive features that some payroll accounting software services advertise are tax accuracy guarantees. But it’s always important to qualify exactly what is stipulated in the contractual details with regards to the guarantee. What percentage of any penalties will be covered? Are there conditions that nullify the guarantee? Who is responsible for making up the difference in underpayments?
There’s also an actuarial angle to consider when it comes to tax accuracy guarantees. When risk is spread across the entire portfolio of a payroll services client base, each client pays a small percentage as part of their regular fee—essentially taking an inexpensive insurance policy out against the possibility of penalties. Choosing to manage payroll in-house instead eliminates this cost driver, but also means the risk is entirely owned by the company.
Another element of risk to consider is related to data security. If you have strong data security and internal accounting controls, keeping data in-house likely represents your best approach for minimizing the possibility of fraud. If on the other hand, your IT and accounting security is lax, leveraging a services provider who can supply a strong level of control can represent a positive in terms of risk management.
With our well verse of knowledge, we are able to advise to customers on what are the different types and brands of accounting software in the market and which is the one which has the functions and reporting suitable to their needs.
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