When you start a business, you’re handling most of the responsibilities on your own. But over time, these responsibilities can start to take up too much of your day and payroll is often the first job to be handed off. Why? Payroll can be incredibly time consuming, for one. The sheer amount of paperwork that needs to be filed, the deadlines you need to keep ahead of, and the legislature you need to keep up to date with can become overwhelming. Secondly, payroll requires experience and expertise to be done correctly, which you may not have.
When business owners are in this situation, they have a few options to consider: hiring a part-time payroll clerk, hiring a full-time payroll clerk, or outsourcing the responsibility to a payroll provider. On the surface, it may seem like hiring a full-time payroll clerk that can dedicate all of his time to your needs is the most cost-effective and convenient option, but the hidden expenses that come with it will surprise you. The cost is much higher than you might initially expect.
Hiring a full-time payroll clerk will cost more than just a salary. Right from the get-go, you’ll have to factor in a benefits package, any CPP, EI, and RRSP contributions that you offer and vacation days, which already start to add up. But then, you’ll have the additional costs that you might not have accounted for in your calculations.
What else will you have to pay for, you might ask? Well let’s start with sick days and leaves, which are the new hire’s right, but could cost you a pretty penny. If the clerk is away often or for long periods of time, another one of your employees will have to take over the payroll responsibilities, and then that employee’s responsibilities will then have to be handed off to someone else in the meantime, too, and so on and so forth. This can lower your productivity, which lowers your overall profitability.
You’ll also need to consider training costs. Hiring a payroll clerk, even one with experience, doesn’t mean he’ll be ready to start working right from the first day. He’ll need time to learn about your business and your administrative processes, and someone else will need to take time away from his responsibilities to teach the new hire. The clerk may also need to attend costly seminars and conferences to be able to keep up with changing legislature.
Though your payroll needs will likely be extensive, chances are there won’t actually be enough work for forty hours a week, every week for every year. Sometimes, there won’t be much to do, no deadlines to meet, and no paperwork to file. But during this time, even if you don’t have any payroll needs to be fulfilled, you’ll still be paying your full-time payroll clerk just for being at the office.
Your payroll clerk may still make mistakes, even with all the training and experience. You have no guarantees that your paperwork will be filed without a hitch. But the clerk isn’t the one on the hook for these payroll errors—you are. You might have to pay even more in fines after all is said and done.
An alternative option that is more cost effective is to outsource your needs to a payroll provider. There are no hidden risks or costs associated with this move and the chances of error are extremely slim. You’ll get the most experienced payroll experts working for you, for less money.