3 Benefits of Hospitality Payroll Providers

Payroll sucks. There, we said it. Has processing payroll ever not felt like it was stealing you away from more time-sensitive tasks? Was there ever a time you didn’t fear being audited for accounting errors made in good faith?

The hospitality industry has increasingly passed these duties off to third-party service providers. Each business has idiosyncrasies which can make calling for backup seem like more trouble than it’s worth. Can you trust vendors to store sensitive data or comply with the latest regulatory requirements?

Lift HCM has relieved the headaches of human resources since 1967, giving business owners the bandwidth to focus on what they do best. Let’s break down the 3 biggest benefits of finding a managed payroll providers provider to understand why today’s hospitality leaders are making the switch.

Benefit 1: Outsourcing Payroll Reduces Costly Errors

Business owners are no strangers to wearing multiple hats. In the hospitality space that sometimes means literally (lookin’ at you, caterers). Unfortunately, these jacks of all trades are often punished by the ones they’ve yet to master. For the 33% of employers who report having made payroll errors up to 8% of their total payroll per year.

In-house payroll management yields twice as many errors as third-party providers, costing the 33% of employers who report making these errors up to 8% of their total payroll per year. But the cost isn’t always so direct. 49% of employees claim they’d start looking for a new job after experiencing just two payroll errors.

Outsourcing payroll to an external partner means passing the torch to a specialist whose business is built on timeliness and accuracy. Specialists are often assigned to a specific industry, cultivating expert-level knowledge of its intricacies and common mistakes.

Benefit 2: Outsourcing Hospitality Payroll Saves Time

Say you run a catering business. You’re a week away from Catalina Wine Mixer when the kid you hired to help with setups and teardowns the summer before they left for college emails you asking for a three-year-old paystub. Do you really want to put your prep for the biggest helicopter leasing event in the western hemisphere on hold? 

Situations like this might explain why a SCORE Association study found that 40% of small business owners listed taxes and bookkeeping as being the most time-consuming and “worst” part of their job.

They’re not wrong. A survey of 1,000 small business owners found the time spent processing payroll adds up to as much as 21 full business days per year. Time invested in maintaining regulatory compliance added up to as much as 10 days per year. This means small business owners are losing a full calendar month’s worth of business days between payroll processing and regulatory compliance alone.

By now, you’ve probably caught onto a common theme: payroll processing eats up time you might otherwise spend growing your business. Therein lies the magic of managed services. Letting experts in hospitality HR do what they do best gives you more time to do the same.

Benefit 3: Payroll Providers Can Minimize Your Liability?

Making a conscious effort to stay informed of changes or additions to state and federal tax laws isn’t enough to protect your business from fees and penalties. About 40% of small businesses face fines averaging $845 each year due to payroll administration errors.

The IRS issued employer penalties to the tune of $6 billion in 2020 alone; as if they didn’t have bigger fish to fry that year. Unfortunately, when it comes to avoiding these penalties, even having an in-house HR manager doesn’t get you off the hook. According to UpCounsel, 50% of HR professionals question their own ability to maintain compliance, with 64% attributing their doubt to a lack of time and resources.

Payroll specialists in the hospitality space can justify the investment of time and effort involved in navigating the regulatory landscape. This allows them to respond to changes quickly and provide impactful support in the event you are ever audited or required to provide additional info to the IRS.

Should You Find a Provider to Streamline Your Payroll?

In case the startling stats we’ve shared throughout this article weren’t enough food for thought, we’ll leave you with something to chew on. Here’s the bottom line:

• Ultimately, 65% of employers admit they’d prefer to lean on HR outsourcing when handling their payroll.
• 15% of businesses with under 2,500 employees already outsource their payroll and the practice is expected to increase by 6% over the next four years.
• Companies that outsource their payroll save 18% over those that don’t.

Given the anxiety of maintaining compliance, minimizing financial liability, and the monopolization of your valuable time; it’s safe to say “we get it”. Payroll sucks. But it doesn’t have to.

If your business is burdened by the demands of payroll processing, then it might be time to consider outsourcing the work to an HR services partner like Lift HCM. Lift is a family-owned business whose humble beginnings in the basement of a retired restaurateur have helped us keep the “human” in hospitality HR for over three generations.

So...what happens now? Well, if you’re thinking of finding an independent vendor for your payroll, your next step is learning how to tell which provider is right for you! That means finding a firm that’s scaled to meet your needs; from mom-and-pop shops to ADP and Paylocity. Spoiler alert! Selecting a midsized payroll provider gives you the best of both worlds.