New Study Shows Outsourcing Saves Time & Money for Small Business Owners

Small businesses can reduce time spent on payroll by 30 per cent and
prevent costly penalties by outsourcing

TORONTO, Oct. 16 /CNW/ - Entrepreneurs who think they're saving money by
sweating the details of payroll in-house are in fact spending 30 per cent more
time for the privilege, according to the ADP Price of Payroll Study, an
in-depth look at 150 small businesses across Canada. According to the study,
outsourcing payroll would save many small businesses nearly one-third of the
time it takes to manage payroll operations, which translates to $939 in
savings each year.
"The ADP Price of Payroll Study is all the justification a small business
owner should ever need to start outsourcing," said Angela Haier, vice
president, small business solutions, ADP Canada. "Cost-conscious entrepreneurs
will be surprised to learn that when it comes to payroll, the do-it-yourself
mentality, quite literally, doesn't pay."

The Study
ADP Canada commissioned Environics Research Group to survey 150 small
business owners across Canada who process their payroll in-house using a
variety of software programs. The study compared the time and related cost for
small businesses to do in-house payroll each year versus outsourcing the task
to ADP.

The Results: Outsourcing Saves Small Businesses Time and Money
According to the ADP Price of Payroll Study, the amount of time small
businesses spend on payroll processing, when translated into dollars, is
significant:

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- Small businesses spend 11.7 hours per employee each year on payroll
processing.
- That means the surveyed companies, who had a median of 13 employees,
spend 152 hours processing payroll annually.
- ADP examined the tasks it assumes or simplifies for a company of this
size when it processes its payroll, and determined that outsourcing
reduces up to 30 per cent of the hours - saving the average small
business (with 13 employees) 42 hours each year - or one full week
worth of work.
- The median salary of the surveyed employees responsible for payroll
was $35,000 plus benefits, or $21.90 per hour. Therefore a small
business spends $3,331 annually to process payroll in-house.
- A 30 per cent payroll time reduction from outsourcing translates to a
savings of $939.
>>

Hidden Costs of Handling Payroll In-House
The ADP Price of Payroll Study also uncovered hidden costs that aren't
typically factored into the hard costs of processing payroll in-house:

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- In nearly half (43 per cent) of all businesses studied, a very senior
person (e.g. Owner, President, CEO, Controller, VP Finance) is
spending valuable time on payroll administration.
- Forty-three per cent of owners also admit to spending time fixing
errors in their payroll when using an accounting software program.
- Eleven per cent of those surveyed said that they have received a
penalty from the government for late payment of remittances when
processing payroll on their own. The median amount of the fine was
$500.
>>