7 Good Reasons Why You Should Outsource the Payroll and Human Resource of Your Business

One common misconception shared by a lot of owners and managers of small businesses in Canada is that the outsourcing of HR functions is only for big firms.

One common misconception shared by a lot of owners and managers of small businesses in Canada is that the outsourcing of HR functions is only for big firms. There are two common reasons behind this false thought.

First, owners think that because they do not have too many employees, they can just do payroll themselves and cover all other HR functions. Second is cost. Many owners simply assume that contracting HR service providers is too costly and thus isn’t worth it.

Times are changing, and businesses are affected. You either adapt to these changes to keep your company afloat or remain within your comfort zone and risk becoming outdated and eventually liquidated.

One of the rising trends among small businesses today is the outsourcing of HR functions, such as payroll. Needless to say, this move does entail certain costs, but the benefits more than outweigh those. These are why you should outsource your payroll and HR functions.

 

Expertise

Accomplishing payroll and other HR tasks requires considerable, knowledge, training, and expertise. Big companies do not have a problem with these because they have the funds to train their people regularly to keep abreast with changing regulations, systems, rates, and forms, among others.

However, your small firm may not find it feasible to dedicate so much time and funds to develop your HR group’s expertise. You may not even have an official HR department. By outsourcing these functions, you get to take advantage of specialized knowledge and training that you wouldn’t otherwise have the time, funds, and energy to acquire for yourself or your business.

 

Productivity

Payroll and other HR functions, even just the most basic ones, tend to take up a lot of time. Even individuals or companies who are specifically trained to handle HR admit that it certainly is not easy and can indeed take a while despite technological advancements in the field.

You have a lot to master: labor laws, benefits, taxation, forms, jurisdictions, deductions, insurance, and a whole lot more. Doing all of these things for yourself can already take hours (Ever wonder why some people just hire accountants to do their taxes for them?). Imagine how long it would take you, who is untrained in HR, to do all of these for all your employees.

By outsourcing all of these to a reliable HR service provider, you free up so much time, and you can use that extra time running your day-to-day business affairs. Productivity is improved, and profits increase.

 

Penalty Avoidance

The sanctions and penalties imposed by the CRA for incorrect filings, payments, and other payroll-related errors can be astronomical. The same goes for issues related to labor laws and the like. In addition to financial losses, imprisonment, scandalous trials, bad blood, and tainted reputations are also common.

Even the best HR service provider makes errors. However, in comparison with you or any of your untrained (and likely unwilling) in-house staff, your HR vendor is much less likely to commit mistakes.

 

Cost Reduction

As owner or payroll manager of a small firm, you may have thought about just managing your company’s HR department yourself despite not being trained in the said field to avoid costs. It is true that HR service providers do not work with clients for free. However, what you spend for the services of these vendors will always be considerably lower than the costs you have to shoulder, in terms of both money and time, to handle HR yourself.

 

Technology

Technology is quickly evolving, and the field of HR has not been exempted. Many owners of small businesses think that because they have a small team, they can get away with doing payroll and other functions manually. Although it is true that such a technique helps you avoid financial cost, it inevitably compensates by taking up too much time.

HR information systems, payroll systems, and other related platforms are now available for businesses of any nature and size. Information can be accessed and manipulated easily and efficiently using these systems.

You also do not have to shell out for each software package or update. Your HR vendor has already included it in the contract price possibly as part of their overhead.

 

Direct Deposit

Many small businesses still pay by paper checks nowadays. However, employees are increasingly developing preference for direct deposit, which can be difficult to do if you are not working with an HR service provider.

Paying your employees via direct deposit benefits you and your workers alike. For your employees, being able to encash their salary without having to go to a bank is convenient. For you, avoiding the use of paper checks, which can be counterfeited, altered, and damaged, is secure and practical. You also get to avoid potential paperwork errors.

 

Peace of Mind

When you entrust the HR functions of your small business to professionals who are specifically trained and educated in HR, a lot of work is taken off your hands and a lot of worry is removed from your mind.

All you have to do is ensure that you are being a professional and compliant business partner by supplying all information required by your HR service provider sufficiently and promptly. Just be a responsible client by keeping yourself informed and involved without meddling.

With a lot of space freed up in your mind, you can focus more on improving profit and strategizing for the long run, among others. You can also streamline your team and have everyone focus on the main order of business instead of trying to master payroll and HR functions overnight.

 

Conclusion

We strongly encourage you to outsource the HR functions of your small business. Of course, outsourcing has a cost, but this move is a quintessential illustration of what all good businessmen like to say: you have to spend money to make money.

Outsourcing your HR functions is not a cost but an investment. It lets you focus on your core business while ensuring zero errors and risk HR-wise. By outsourcing, you, your employees, and your selected HR service provider all benefit.

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