When Writing Your Business Plan, Be Sure to Include This

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A plan to outsource back office departments can save you time and money.

June 15, 2018

3 min read

Opinions expressed by Entrepreneur contributors are their own.

Since the inception of my company enBio, we have outsourced human resources and payroll. If you’re ready to start a business, I suggest you do the same and make sure to include that in your business plan.

Running an internal HR and payroll department is an expensive undertaking -- especially for startups, small and mid-sized companies. Outsourcing will save you time, resources and importantly, money. Here's a breakdown of what I have found over the years of running my company.

The benefits of outsourcing HR

For starters, outsourcing HR will likely save you money as it helps reduce the cost of maintaining nonrevenue-generating back-office expenses. A fully-functional human resources department requires additional office space and highly-trained and experienced HR staff.

Related: 10 New Age HR Software Solutions

You need to ask yourself if you can afford an experienced enough HR professional (salary, benefits, and perks) who not only can handle the day-to-day but can also stay on top of increasingly complicated federal, state, local employment laws and compliance-related issues, such as:

• Healthcare mandates
• State and local minimum wage changes
• Labor law compliance
• Worker’s comp
• Sexual harassment
• Leave time
• Tax implication strategies by employee classes
• Penalties for improper training
• Employee handbook updates

Benefits of outsourcing payroll

Payroll is an essential part of your business, much like sales and customer service. It's not just a twice-monthly burden or a bookkeeping task. Payroll is how you reward and retain employees. When there are errors due to miscalculations, you'll wind up with dissatisfied, unmotivated employees.

Related: 3 Reasons Why HR is Critical to Your Company's Success

Calculation errors are not the only concern, however. There are hundreds of tax codes and payroll regulations that you need to understand. A payroll mistake with any one of these items can be costly:

• Classification of employees and contractors
• W-2 forms
• Tax deposit and filing deadlines
• Overtime payments
• State unemployment taxes
• Garnishments and levies
• Taxable items

While every business owner wants to focus on delivering that product or service the business was founded on, they unavoidably begin spending more and more of their time on back-office tasks. The owner of nearly every company will beam with pride when talking about his or her products and services; however, that enthusiasm quickly fades when the conversation turns to these issues. I recommend outsourcing HR and payroll so that you can not only efficiently and effectively stay up to date, you can stay focused on what made you want to start a business in the first place: creating first-rate goods and services for your customers.

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