Why The #1 Task Small Businesses Outsource Worldwide is Accounting And Payroll

There is a lot going on when you pay your employees. It’s not just a game of writing checks, clocking employee billable hours or cash handling. For small businesses that aren’t well versed in accounting and payroll processing, In-house processing is a hidden money burner and a major headache with spends upwards of 2 lakh per year just in direct labor costs.

Why consider outsourcing accounting and/or payroll services?

Before outsourcing payroll and/or accounting services, the first question you need to ask yourself is whether you truly need to? If you’re acquainted with accounting or have someone in your office that can take on the job, it might be OK to keep this in-house, but only if you have less than 10-15 employees.

Just managing payroll itself, is however, not everyone’s cup of tea & for everyone out there who thinks this job needs no experience and can be done easily; have a look at what your responsibilities can be as a accounting/payroll manager:

1. Filing quarterly reports.
2. Withholding employee taxes.
3. Paying withholding to government agencies.
4. Making summary filings at the state level.
5. Managing employees’ health and pension plan contributions.
6. Family leave assessments & handling state disability/ unemployment.

Now, for those who sincerely think they weren’t aware of this or were aware of these responsibilities & were ignoring them till now, you could have a serious issue at hand. An increasing number of companies are outsourcing their accounting services requirements to expert vendors. An outsourcing partner can deliver superior results and minimize costs, while allowing you to focus on strengthening your focus business areas.

Benefits of using outsourced accounting and payroll services?

The small business owners that we talked to who use online payroll and accounting services say they see a variety of benefits, including:

• Reduced headache: of recruiting, hiring and managing clerical staff with accounting work outsourcing. Business owners who outsource payroll eliminate a major source of personal pain.
• Using payroll software means no angry employees, no technology headaches and expert advice.
• Reduce costs: Eliminates unnecessary operating costs and overheads; save money on wages
• Do not ever miss any statutory compliances with outsourcing of accounting & taxation work
• Better technology and more experts with outsourced accounting, payroll services

Accounting Outsourcing costs totally depends on the size of the business and its operation scale. Accounts outsourcing services can be customized based on the budget, which the client may have, depending upon following outsourcing models: Onsite full time, Onsite part time accounting or Offsite accounting.

Mr.Sunil K Gupta, Consulting Associate

The majority of the SMALL BUSINESSES are under 25 employees, and this means that the owner has to be more productive by generating more sales hence Outsource Payroll.

RandhirNagvenkar, Assure IT Services

Outsourced Payroll service features include:

At a basic level, you want a payroll service that keeps track of employees’ wages and fees, processes paychecks and records and organize everything for evaluation of tax. However, today payroll companies offer much more than you expect and the thing is it’s good because the whole point of appointing an expert is to get more; here is checklist of what ‘more’ they offer:

1. Employer tax payments: Online payroll services handle all the tax-related issues, take care of complicated tax forms, online payroll and accounting services thus help reducing the risk of something going wrong.
2. Benefits administration:They offer ways to enhance employee benefits. Small businesses can use these tools to manage health insurance plans, flexible spending accounts and transit reimbursement plans
3. Retirement services:These systems make it much easier for businesses to set up and monitor IRA retirement plans, and for employees to control their contributions.
4. Paid time off: Keeping track of employees’ billable hours &sick leaves. These features also make it easy for employees to request time off and for employers to approve or deny it.
5. HR forms management: Payroll services also provide a way for businesses to keep important human resources forms and documents in one, easily accessible and safe place thus minimizing workload and keeps everything organized.
6. Report filing:Handling all of the required reports that must be filed with federal, state and local governments, also sending those reports on time, some services also offer businesses the ability to review them online.

Outsourced Accounting and Bookkeeping Services

Good accounting firms believes in understanding customers’ exact needs and developing a customized solution that best suits their diverse business needs. They cater to the accounting needs of global clients by offering a comprehensive range of services, which includes –

1. General Accounting and Bookkeeping Services: Preparation and maintenance of day-to-day bookkeeping and monthly or quarterly accounts, where they act as your accounting bookkeeper.
2. Preparation of Financial Statements: Preparation of annual accounts for the statutory annual audit
3. Preparation of Tax Returns: Preparation of periodic tax, sales tax, and other returns
4. Cash Forecasting Services: Analysis of the cash requirements of the business and forecasting cash requirements
5. Debt Collection Services: Assistance for the recovery of debts and taking necessary legal action
6. Payments to Creditors: Assistance with making payments to creditors while leaving ultimate control with the management
7. Cash Handling Services: Assistance with treasury functions like operation and monitoring of high-interest deposits and current accounts
8. E-accounting services:They have expertise in this area and can help you with any of your e-accounting functions
9. Accounting Setup Services:They can help you achieve your business objectives with our accounting setup services.
10. Additional Services typically include:
    • Accounts payable services.
    • Accounts receivable services.
    • Financial reporting services.
    • Accounts reconciliation services.
    • Write-up Services.
    • Invoice processing services.
    • Migration of Legacy Systems.
    • Customer invoice services.

How much does outsourcing accounting / payroll cost?

Payroll & accounting services pricing structure is pretty standard. Most online payroll & accounting services charge users a monthly flat fee, based on the services being provided and the number of employees. Many of the services that we found offer businesses different packages. For example, a basic package might only include the running of your business’s payroll & accounting, while more advanced packages might also include paying your taxes and printing forms for employees. Monthly fees can range from anywhere between 12k and 60k INR per month depending on the package chosen.

There are onsite/offsite accounting services wherein onsite costs around 20-25k INR per month whereas an offsite service might cost 15-20k INR per month. Payroll services for small & medium enterprises are usually charged on the basis of number of employees which can be 10k INR for up to 30 employees & 100-150 INR per employee above that number. In addition, most services also charge an additional fee per employee check paid. We found that those costs can run anywhere between 120 to 500 INR.

Choosing the right one

If you’ve decided you’re ready to choose an accounting and payroll outsourced service, it’s time to decide which one might be right for your company. The small & medium enterprise owners we spoke with said some of the most important factors to consider include:

• Cost
• Ease of use
• Customer service support

A more robust way to help determine the right payroll & accounting service for you is to make sure you are asking the right questions. Payroll & accounting experts that we interviewed told us that before making a decision, you should ask potential payroll & accounting service providers questions, such as:

1. How long have you been in business?
2. How often are your tax tables updated for compliance?
3. Do you have other clients in my industry?
4. How important will my business be to your company?
5. If I have a question or concern, whom do I go to?
6. What’s the structure of your customer service department?
7. Can you integrate with my employee benefits offerings?
8. How can I monitor all of my payroll & accounting transactions with you?
9. How will you handle my business as my company grows?
10. What are your fees and contract policies?

What to watch out for

You also want to watch out for any potential red flags when researching online payroll and accounting providers. Here are some things to watch out for:

• Make sure the company you outsource your payroll & accounting to is trustworthy and dependable so you can be sure your critical information is in good hands. The company should be bonded and insured.
• Make sure the online payroll & accounting service is properly paying the IRS on your behalf. If they aren’t, your business could incur huge tax penalties.
• Make sure your online payroll & accounting service providers are aware of your tax requirements and deadlines.
• If you are using an online service, make sure they company provides a secure connection to ensure your data is protected.
• Choose a service that is very transparent and up front with its clients.