Are you reaping the benefits of outsourced HR and payroll services?

Managing payroll is a largely time-consuming, stressful responsibility for all growing staffing firms. The record keeping, the data entries, calculations and remittances, the filing of reports and returns, the time-sensitive tax payments – it’s quite a lot to stay on top of. Thankfully however, independent staffing agency owners can reap the benefits of outsourcing payroll management from a back office solutions provider.

This article will cover four different ways that outsourcing payroll benefits staffing agencies. Below are the topics we’ll be covering:

  • How Outsourcing Payroll Saves Your Staffing Firm Valuable Capital
  • How Outsourced Payroll Will Help Your Agency Avoid Legal Issues
  • Ways Your Staffing Business Can Thrive by Outsourcing Payroll
  • Why Outsourcing Payroll Funding is Crucial for Growing Staffing Agencies
  • Conclusion

How Outsourcing Payroll Saves Your Staffing Firm Valuable Capital

An overwhelming 45% of service companies such as staffing firms fail by year four (Statistic Brain) - with inadequate funds being a key reason. Saving and generating as much money as possible is incredibly important for a staffing agency on the rise – but when an agency owner is handling payroll duties all by themselves, there are a number of financial risks and burdens at play.

Here are two key ways outsourced payroll services will help you to save important funds:

1. You won’t need to spend money on in-house payroll services and supplies.

Spending valuable funds on training and employing an in-house payroll clerk can be very costly for a small to medium staffing agency. Apart from the regular salary, there are benefits, vacation pay, possible maternity leave, etc. that will also take a dig into your hard-earned funds. Then consider the costs of payroll software, printers and ink, checks, etc.; investments that will require upgrades and maintenance. Thankfully, both the direct expenses of in-house payroll management can be significantly reduced when you outsource.

2. It will help you to avoid costly fines.

According to the IRS, around 33% of employers make payroll errors that cost them billions of dollars in penalties annually. And it can certainly be easy to make such errors, as our tax law regularly undergoes changes.

These time-sensitive payments are quite easy to miss and challenging to keep up with, especially during hectic periods at the workplace. Fortunately, outsourcing payroll mitigates the risk of facing such fines, saving you money and needless stress.

For staffing firm owners who are inexperienced with payroll responsibilities, there are legal risks involved. Certain errors can occur (and are easier to make than one might think) that can land your agency in hot water. You just don’t want to put yourself at risk for any of this – and outsourcing payroll to the professionals will help you to ensure you’re protected.

Some of the potential errors commonly made by staffing agency owners include:

1. Miscalculating pay.

Miscalculating pay, or misunderstanding the legal regulations and standard laws that must be abided by for fair compensation is a common mishap. For example, overtime pay can be easily miscalculated which is not only unfair to your employee, but will put your company in harm’s way once it becomes an evident issue. Outsourcing payroll to experts who are familiar with all of the laws and regulations will help keep your employees properly compensated and happy, and will keep your company afloat.

2. Inaccurate record-keeping and contractual issues.

As a staffing firm owner, it’s critical that you record all important data is accurately, and ensure that your contracts contain the correct wording necessary to clearly lay out the rules protecting you, your agency, and your workers from legal turmoil. Outsourcing payroll responsibilities helps you to ensure that all paperwork, remittances and legal obligations are handled properly and professionally, so you don’t need to worry about the respective legal risks.

3. Misclassifying workers.

Employees should always be classified as either full or part-time based on the number of hours they contribute to your company – but things can get tricky for those inexperienced with administrative and payroll responsibilities. Employees often get classified as independent contractors, placing staffing firms in legal cahoots – but outsourced payroll and back office support ensures all employees are properly classified.

Ways Your Staffing Business Can Thrive by Outsourcing Payroll

In addition to managing your growing staffing business, your payroll tasks and record-keeping duties can seem never-ending – taking up a whole lot of your precious time. There’s no doubt that your primary focus should be on what you do best: recruiting, and growing your staffing empire.

With that said, here are some ways outsourcing payroll services will allow you to thrive in the staffing world:

1. You can focus on growing your client base, and networking.

Your clients are the ones keeping your business alive – and word of mouth, alongside efforts to market your offerings online/via social media, are some of the most important tools when it comes to bringing more clients to your door. With the copious amount of time managing payroll takes up, you and your team can allot time to gaining clients through organic networking and online promotion instead.

2. You can focus on finding your niche.

What’s your niche market in the staffing industry? It’s critical that your staffing firm at least has an area of focus in order to stand out among your competitors. Not having to worry about time-consuming and tedious payroll tasks will leave you more time to work on understanding and zeroing in on your strengths so that you can capitalizing on them – an often overlooked key to competitive success.

3. You’ll have more time to yourself, so you can perform to the best of your abilities.

According to Tower Watson, 57% of employees who claimed to be stressed at work felt disengaged and less productive compared to 10% of employees reporting a low-stress work environment. And let’s face it: payroll is stressful, and requires a lot of your hours. The less stressed your work environment is, the more room it has to be productive – which will aid in your agency’s accomplishments.

Why Outsourcing Payroll Funding is Crucial for Growing Staffing Agencies

According to Gusto, “over 40% of small businesses get fined an average of $850 each year for payroll-tax related issues–the most common [reasons being] missed or late payments”.

Making payroll is potentially one of the largest, most stressful responsibilities of owning a staffing firm – especially if your company is still growing or in its beginning stages. So it only makes sense to outsource payroll funding so that there’s no risk of acquiring debt or facing legal issues which can quickly drag your company down to the ground.

When a staffing agency outsources payroll funding, they are gaining the financial protection superior to that of a bank loan. This is because with a bank loan, it isn’t out of the ordinary for the owner of a new or growing agency to be denied by the bank. Banks will deeply consider equity and credit score, with most considering a score around 700-800 to be ideal. And if a recruitment firm owner does get approved by the bank for the loan, it can be several weeks or more until they see it (compared to as little as a day with funding) – which isn’t necessarily convenient for an industry that commonly deals with late-paying clients. With payroll funding, there is also a potential for unlimited funding; at the bank, there’s a cap.

Don’t be part of the Canadian debt statistic…

Debt can accumulate fairly quickly for a staffing firm that is still establishing itself in the market.
In an article by (Financial Post)[] (2018), Martin Roberge, a portfolio strategist at Canaccord Genuity Group Inc. states s that “Canadian companies have a record 60 US cents of debt for every dollar of sales that they generate, compared with about 35 US cents of debt per dollar for U.S. companies”. So with Canada’s combined corporate debt already at a staggering low, think about the continuous funding you’re going to need as your staffing firm grows.

That fact is, there are disadvantages to bank loans when it comes to your specific industry. A bank loan might be an appropriate option for more established companies with secure collateral – but for a growing recruitment business, your needs for additional financing will be quite considerable.

Fortunately, outsourcing payroll funding will serve as the aid you need to help you thrive. And there is also the added benefit that professional payroll funding companies are staffing specialists know about what’s going on in the staffing industry – not so much the same case with a bank.


There’s no question that outsourcing your Canadian staffing agency’s payroll responsibilities provides multitude of benefits that all play a substantial role in fostering your business’s success in this competitive industry.

Outsourced payroll services will help you save money and time, avoid legal problems and financial burdens, and allow you to allot your time to what matters most: expanding your client base and providing exceptional service to your current ones.

The Agency Can Help Take Your New Staffing Firm to Greater Heights

Outsourcing payroll and back office services from an experienced and reputable company like The Agency Support Partners will provide your company with the ultimate support it needs to succeed. Contact us today to get started.