In our experience, these are the top reasons that small- and medium-size businesses outsource payroll:

1. Avoid IRS Penalties
According to the IRS, 40 percent of small businesses pay an average penalty of $845 per year for late or incorrect filings. Most national payroll services provide a tax guarantee, ensuring that there will be no penalties and taking responsibility for penalties when they do occur. In many instances, this immediately cost justifies outsourcing payroll.

Gary Choates, SurePayroll Customer: "Not having to worry about IRS fines is one of the things I’ve enjoyed most since I outsourced payroll. I certainly don’t miss getting those penalty notices."

2. Reduce Costs
The direct costs of processing payroll can be greatly reduced by working with a payroll provider. Our research indicates that a small business of 10 employees will typically spend $2,600 per year in direct labor costs associated with payroll.

Bruce Beerbower, SurePayroll Customer: "Even if I have a part-time bookkeeper helping with payroll I still end up paying much more than I pay to outsource."

3. Alleviate Pain
Payroll is a headache in the best case and a nightmare in the worst case. Business owners that outsource payroll eliminate a tiresome source of personal pain.

Jolene McMorran, SurePayroll Customer: "I always wanted to start a business but once I got started I realized that doing payroll is tedious, painful, and no fun. When I finally outsourced payroll, the pain was gone and I started having fun again."

4. Enable Direct Deposit
Providing direct deposit is difficult if a company doesn’t use an outside payroll service. Increasingly, small businesses recognize that employees want direct deposit – not having to make a trip to the bank is an important convenience for them. More importantly, for business owners, direct deposit eliminates time-consuming and error-prone paper handling.

Ross Kasner, SurePayroll Customer: "The beauty of outsourcing payroll is that I finally can offer direct deposit to my employees. They’ve been bugging me about it forever. I’m just as happy as they are not to have to deal with printed checks anymore."

5. Create Free Time
Payroll processing is a time-consuming process. Outsourcing payroll can free up staff time to pursue more important value-added activities.

Mike Kerrigan, SurePayroll Customer: "Outsourcing payroll has given me extra time to focus on selling. That’s been great for our business. I’ve also managed to attend a few of my daughter’s soccer games, now that I don’t have to spend the time preparing payroll."

6. Avoid Technology Headaches
A constant question for the small business owner is whether or not they have installed the latest version of the software and the most recent version of the tax tables – using the wrong tax tables can result in stiff penalties. Outsourcing payroll removes the technology headaches of keeping your payroll software up to date and running smoothly.

Grant Patrick, SurePayroll Customer: "We forgot to update our tax tables once when we were processing payroll in-house. That resulted in some mistakes in our filing and then we got hit with the penalties. I tried to explain the situation to the IRS but it was like talking to a brick wall. Now that we’ve outsourced, I don’t need to worry about keeping software up to date anymore."

7. Leverage Outside Payroll Expertise
Most business owners and controllers don’t have time to keep up with constantly changing regulations, withholding rates, and government forms. By outsourcing payroll, a small business can take advantage of expertise that was previously available only to big companies.

Pete Georgiadis, SurePayroll Customer: "God bless the people who are able to stay on top of all the changes in the payroll rules and regulations. That’s not something we know anything about. We are happy to leave it to the experts at our payroll provider."

8. Avoid Payroll Knowledge Walking Out the Door
When your bookkeeper or controller gets a new job, they often walk out the door with their knowledge of the payroll process and how you do it. Using an outside service eliminates that business risk.

Kevin Weinstein, SurePayroll Customer: "When our bookkeeper moved out-ofstate, we hired a new bookkeeper to do payroll. Just as he finally figured out how to do it right, he decided that he wanted to go back to school and become an actor. Now that we’ve outsourced payroll, I don’t have to train anyone to do payroll or worry that somebody I’ve trained will quit and go somewhere else."