Outsource your payroll, not your people.


One of my best pieces of advice to fledgling companies is to focus on your strengths, do what you know best. Recognize your operational shortcomings and delegate those tasks to somebody who has the expertise you need. Whether you are hiring your first employee or the fiftieth, if you aren’t a human resources professional or have someone on staff, outsourcing your payroll to someone who can handle it correctly, and going as far as potential employee recruitment, and short and long term hiring could make sense and cents in today’s complex and litigious tax/healthcare/workers comp/labor law arena.

One way to make your work life easier is to outsource your payroll. Payroll is one of your company’s biggest expenses AND biggest headache if it isn’t done correctly.  Employers are responsible for withholding federal income tax and other federal and state taxes from each employee’s paycheck. Payments and requisite documentation, namely the IRS Form 914 Employer’s Quarterly Federal Tax Return must be submitted on time to avoid penalties. The end of the year requires preparing and distributing W-2s for your employees and 1099s for contractors paid over $600. And don’t forget about 401(k) and Section 125 mutual fund plans and other automatic paycheck deductions, garnishments and employee benefits. National names like Paychex and Adecco as well as many local accounting firms can handle all those payroll tasks for you. It’s not always cheaper than an in-house person and an adding machine but when you factor in the time, the talent, and the risks of doing it wrong, that extra expense may be the price of sleeping  a little better at night, knowing it’s  done right.

Let’s back up another step to the initial recruiting, screening and hiring process. Local Adecco branch manager Nancy Luther suggests that companies like yours turn to companies like hers to navigate the HR waters. She explains, “Companies with seasonal needs, gap coverage issues and special projects routinely use workforce solutions providers. First, you define the task at hand — a data entry person for 2 months to help you catch up on required documentation or extra hands for 3 weeks to help with year-end inventory or an administrative fill-in to cover medical leave. Whether for a short term or long term assignment, you let Adecco pre-screen, test, and interview and then send you qualified applicants. Adecco then manages the payroll, tax reporting, workers comp issues, health benefits, etc., for you for the term of the contract. That’s a win-win for all involved.”

What works short term can be employed for longer term hires too. You’ve heard stories of someone who is great in the interview and has good references but underperforms on the job or never quite fits into the company culture after they’re hired. “With Adecco workforce solutions,” says Nancy Luther. “You define the requirements, let us handle the recruitment and hiring process, and then let time tell whether or not this person is a good fit for long term employment. It can even work for the term of that multi-year contract you’ve won or just as a matter of convenience for all parties.”

Or you can take the soup-to-nuts approach of having some to no employees on your books at all. Everyone in your workforce is a contract worker, employed by the outside agency, like Adecco and PMIPEO in Fort Walton/Panama City. You retain the role and responsibilities as well as boss’ prerogatives to select candidates and manage their performance on the job. You pay more per hour of course but forego all that overhead and compliance associated with payroll, tax reporting and HR in general.

Of course, it’s up to you. But it pays to know your options in HR.


Jamie Shepard
Consultant, Business Innovation Center

More info