Run my own payroll? No thanks
More than 60 percent of small-business owners do not want to handle their own payroll, according to a recent survey by Intuit. In recent years, small firms looking to expand their services have turned to payroll as a first step. It’s becoming clear that this strategy is wise, as small businesses often look to outsource payroll first, sometimes even before accounting services.
While the survey did find that businesses wish they could outsource payroll, it’s not primarily because they feel they are unable to handle it — 60 percent of respondents also said they are “extremely confident” in running their payroll. Instead, the survey suggests that payroll is time-consuming, and they would rather be spending that time on their business or family — 64 percent said they never realized how much time doing payroll would take. By Intuit’s calculation, each pay period, business owners spend 4 hours and 52 minutes calculating, filing and paying payroll taxes.
Seventy-nine percent of small businesses said it’s difficult to stay ahead of payroll tax laws, another reason outsourcing payroll becomes necessary, and 61 percent are not aware of all the deductions, incentives and refunds that their small business may be entitled to receive. Payroll is already one of the largest expenses a business has. Mistakes on payroll can be even more costly. Seventy percent of businesses surveyed said that varying labor laws across cities and states make things harder, which indicates a need for regional accountants well-versed in local laws.
If small businesses don’t want to fully outsource yet, they may be ready for payroll software instead. But while 72 percent have experienced the benefits of automated payroll software for themselves, and among these, 73 percent credit their software for improving cash flow by maximizing deductions and keeping money in the business, it’s still true that many small businesses nonetheless wish they could outsource the whole piece to professionals (see chart).
To see more survey details, click here.