Now that the economy is tightening, accountants and their small business clients are asking whether it’s a good time to outsource their payrolls. It’s a perennial question that comes up in good times and in bad times.

To start answering the payroll outsourcing question, you need to determine where payroll fits into your suite of services. Payroll can be a lot of work and responsibility, yet it also provides recurring revenue. With many firms facing staffing pressure today, you need to think hard about how best to deploy resources.

Here are four questions you and your small business clients need to consider when looking at managing payroll:

1. How much time does it take in total?
   
   Payroll management may take longer than you think. More than writing checks every pay period, payroll is also properly calculating net pay, preparing quarterly and year-end tax forms, filing W-2s and handling employee inquiries. Don’t underestimate the total time devoted to payroll-related tasks.
2. Are you prepared to do the hard work of compliance?
   
   With constantly changing tax laws and employment regulations, keeping up with change requires constant attention. It’s easy to fall out of compliance with a new law or regulation and risking costly fines and interest.
3. Where do you turn for questions?
   
   It’s safe to say that payroll is not a core competency for small business owners. By outsourcing to a full-service outside provider, owners can tap into expert help for issues and get answers to questions regarding payroll, tax and HR.
4. Can you easily build additional benefits?


Businesses that outsource their payroll can take advantage of a host of other services that they might not otherwise be able to offer. Retirement plans, premium payment programs for workers’ compensation and convenience features such as direct deposit and payment cards are some of these offerings

Once a small business owner evaluates these questions, he or she will most likely turn to his/her most trusted business advisor — you, their accountant — for advice on what do next.

Accounting Firms and Small Businesses Benefit From Outsourcing

If your clients ask for help and you’ve decided to provide payroll services, you can work with an outsourcing service provider delivering software and service to make your job easier. For example, RUN Powered by ADP, Payroll for Accountants(SM) can be the behind-the-scenes engine for your payroll practice. This Software-as-a-Service (SaaS) technology gives you a solution with no software or special hardware to install; RUN is entirely online.

Firms can also use RUN as a wholesale solution, because RUN gives you the flexibility to choose how to handle payroll on a client-by-client basis. For example, do you want to file taxes and print checks or have your outsourcing partner handle it for you? RUN offers both options. You can also assign clients to specific members of your firm and choose whether to enter basic payroll data yourself or allow your clients to do it.

If you’ve decided not to get involved with payroll, you can refer clients to a major service bureau for stand-alone payroll outsourcing and other services. Alternatively they can partner with a Professional Employer Organization (PEO) offering payroll and human resources via an off-site HR department.

Outsourcing will provide advantages over do-it-yourself payroll; enabling you and your clients to run your businesses more effectively. When you consider payroll processing, carefully evaluate all of the benefits and risks involved and determine the best way to proceed for individual cases.

For more information, visit ADP Small Business Services.