Why Outsource Your Payroll When You're A Small Startup?
You become accustomed to dealing with situations that would drive the average person crazy as a startup founder. You answer the phone during dinner, spend hours with the development team fixing bugs, and often have to clean the office because no one else will.
All of this is to say that being the founder of a startup can make you immune to the most frustrating, time-consuming, and downright jobs. You could call it startup tunnel vision. The problem is that you can become so accustomed to doing everything that you don’t consider whether there might be a better way. It is precisely what many startup founders experiences.
Payroll is a necessary task that someone must complete. It is not only an administrative task, but it is also how you compensate your team for their efforts. However, this does not preclude the founder from ensuring that employees get paid on time. Outsourcing payroll could be a significant time-saving hack that most startup founders haven’t considered. To help you see the bigger picture, we’ve outlined why outsourcing your payroll could be a good idea for your startup.
Why outsource your payroll?
You may be wondering if outsourcing your payroll is any better. Though paying for a service may seem painful when you’re trying to get your teeny, tiny startup off the ground, the benefits of outsourcing your payroll far outweigh the costs. If payroll gets included in your bookkeeping, you may be able to kill two major administrative birds with one stone.
- Cost – Money is the most important consideration when starting a business. When you try to run payroll in-house, you end up spending much money on paycheques, tax documents, software, and other expenses. Of course, the highest cost is the amount of time you spend each week running payroll.
When you think how much your time is worth per hour, you’ll likely discover that outsourcing payroll is a far more cost-effective solution in the long run. It is especially true for startup founders, as time is money.
- Time – Any startup founder who has tried their hand at payroll knows how much time and attention to detail it requires. In an ironic twist, the more successful your company is, and the larger it grows, the more time payroll will consume.
Payroll outsourcing frees up that time, allowing you to focus on more critical tasks like refining your sales strategy or brainstorming a new marketing campaign. You didn’t start a company to spend hours calculating income deductions, so always consider where your time gets best spent.
- Security – It’s no secret that doing your payroll isn’t the most secure way to handle employee information—you’re essentially inviting a security breach. For one thing, there’s a chance that employees will tamper with the records. Furthermore, if you store data on a server with security flaws, you may be vulnerable to data theft.
On the other hand, outsourcing payroll places your company’s data in the hands of those who understand how critical security is. These businesses benefit not only from the increased security of cloud computing, but they can also trace any errors to protect your company from potential losses.
- Employee Satisfaction – As a startup founder, you are already aware of how time-consuming and frustrating it can be to manage your company’s payroll. However, you may not have considered how it affects your team. According to one survey, nearly half of people start looking for a new job after two payroll mistakes. In other words, payroll mistakes could cost you much more than money.
It may seem obvious, but employees are happier when paid on time and for the correct amount. You never have to worry about employees sending you disappointed emails about not receiving their paycheque on time with outsourcing payroll.
Even if you have some payroll experience, it is safe to say that payroll is not a pleasant experience. At best, it’s an administrative annoyance and a downright nightmare at worst.
However, you instantly eliminate all of those concerns when you outsource your payroll. Payroll professionals have years of experience dealing with the complexities of tax laws, regulations, and government compliance, so you don’t have to.
With the examples above in mind, it is obvious to see that outsourcing payroll is the wisest decision for your startup. With Wave Taxes, payroll and bookkeeping are no longer a hassle.
Commonly asked questions
- Is it a good idea to outsource payroll?
Employers can focus on their core business by outsourcing payroll, freeing up the business owner or accounting personnel to work on more strategic jobs that may affect your bottom line.
- Is there a payroll tax in Canada?
The federal government levies two national payroll taxes: insurance (EI) premiums and Canada/Quebec pension plan (C/QPP) contributions. While EI premiums are imposed on employees and employers, C/QPP contributions are levied on employees and self-employed individuals.