A common piece of advice given by business consultants is: focus on what you do best and outsource all non-core functions of the business. In most businesses, administrative functions, such as payroll and tax filings, while critical, are still considered non-core functions.
Although payroll administration may be a non-core function, it holds a lot of importance. Get it wrong and employees will be left feeling dissatisfied, undervalued, and demotivated…to say the least. Payroll processing can also be a complex and time-consuming distraction that draws attention away from other key functions that help a business to grow.
For these reasons, outsourcing payroll can be a great decision for many employers. It provides not only time savings, but also improved security, fewer errors and reduced compliance risk.
What many employers may not realize, however, is that the benefits they receive by outsourcing their payroll can be expanded to alleviate the other headaches associated with employee administration – like HR and compliance management, employee benefits and workers’ comp insurance.
An outsourcing option that is growing in popularity is to engage a Professional Employer Organization (PEO) to handle the daily grind of HR admin. PEOs aggregate employers together to provide HR, technology, insurance and regulatory compliance management. The result… a more efficiently run business at a lower cost.
Some of the functions can include:
- Worker’s Compensation Insurance: The key advantage to the small business owner is improved cashflow. Under a PEO, workers’ comp insurance is typically provided on a “pay-as-you-go” basis - with no upfront deposit and also no year-end audit.
- Employee Benefits: Benefits are expensive, but they are also instrumental in helping to attract and retain top talent. By leveraging the PEO’s group buying power, you can offer a benefits package that will rival those typically only found in Fortune 500-type companies. And better yet, the PEO handles all of the plan shopping, rate negotiations and administration.
- Human Resources: Most small businesses cannot afford to fully staff a Human Resources department. So, the HR related tasks in a small business are usually distributed to several different employees within the organization – most of whom have little to no formal human resources training. By utilizing a PEO, small businesses gain the expertise and guidance of trained HR professionals. This not only can keep you in compliance with the ever-changing labor regulations, but can also provide you with sound advice to help improve employee performance and even mitigate the potential risks of employee practices liability.
So, if you and your staff are spending too much time on HR administration, then it may be time to look at some outsourcing options. For small businesses, the best way to manage your HR is ---don’t… Instead, let a PEO handle it for you!