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Large corporations find it cost-effective to have a variety of services provided by full-time employees, including, but not limited to:

  • Accounting services
  • Legal services
  • Payroll
  • Employee benefits administration

Small businesses typically cannot afford to hire full-time professionals in fields such as these. For one, before a firm reaches a given size, the amount of work needed in each of these areas may fall far short of requiring a full-time employee. Accordingly, small businesses will use an independent Certified Public Accountant (CPA) for accounting services and an independent attorney for legal services, normally paying hourly fees to both.

For the smallest firms, independent CPAs normally can help manage the payroll. Once the number of employees begins to grow, however, this task may be inappropriate for the CPA. The CPA will have a relatively expensive hourly billing rate. He will have limited time to offer, given other client commitments.

On the other hand, payroll still may be too small a job to warrant setting up an internal function. In this case, the small business owner (often with the independent CPA's guidance) should consider outsourcing payroll. There are a number of national and regional firms that perform payroll services (sending checks or wiring direct deposits, withholding taxes, keeping records required by law, etc.) at a reasonable fee.

Employee benefits include, but are not limited to:

  • Health insurance
  • Life insurance
  • Accident insurance
  • Tax-advantaged savings plans, such as 401(k)

Outsourcing the administration of benefit plans also can be a very cost-effective move for the small business owner. Sometimes the same firms that provide payroll services also offer expertise in these

areas. There also are benefits consultants who will assist you in setting up plans and in choosing providers. Check with other business owners in your area, or members of local business associations, for help in choosing a savvy benefits consultant.

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