Outsourcing Payroll, Reasons for and Against

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Correctly managing payroll for a business of almost any size requires a great deal of time and effort. This is just one reason to outsource payroll. However, if you’re more DIY inclined, you may want to learn how to handle it yourself. Whichever option you choose, it’s a personal decision based on your skills and resources. So, it’s no surprise many business leaders are often on the fence about which choice is best for them. It is for these individuals we wrote this blog post. Today, we will discuss some reasons to outsource payroll and some reasons not to. We hope it will help you down the path of making the best choice for your business.

Five Reasons to Outsource Payroll

  1. Reduced staff cost. When you outsource payroll, there’s no need to keep a payroll expert on staff. You simply need someone to handle the data entry and report changes.
  2. They handle payroll reporting for you. Payroll outsourcing companies take care of the various quarterly and annual payroll reports their clients must file. If you’re asked to garnish an employees’ wages, the payroll company will make sure that gets done properly. Sometimes they can also handle ACA and 401(k) reporting.
  3. More time for other tasks. Because payroll companies handle most of the payroll processing legwork for you, you’re free to focus on the revenue-generating aspects of your business.
  4. Freedom from time-consuming and sometimes costly software updates. When you have a company handling payroll for you, there is no need to keep the payroll tax tables in your accounting system up to date.
  5. Better data security. When you keep the payroll in-house, there’s a chance one of your more computer savvy employees could accidentally or maliciously access it. Outsourcing moves this very personal information off your systems and mitigates that risk.


Five Reasons Not to

  1. Greater control and flexibility. With the payroll in the house, you can respond faster to last-minute changes.
  2. Increased privacy. When you handle the payroll yourself, it is only accessible to employees you know and trust. When you outsource it, people hired by the payroll company whom you know nothing about have access to your employee’s sensitive information.
  3. Better cash flow control. A payroll company will generally take the funds to cover payroll and the related taxes out of your bank account before payday. When you keep it in-house, you have until payday to submit payment and likely another three days after that before taxes and other fees are debited.
  4. On-demand access to your company’s payroll information. All your payroll history is at fingertips anytime you need it. There is no need to waste time contacting someone at the payroll company to request it.
  5. Greater reporting flexibility. Again, since the entire breadth of your payroll data is available to you, you can use it to create the reports that make the most sense for your business. There’s no need to wait for someone else to prepare them for you or pay extra fees for this service.


Still not sure which payroll option is best for you? There’s a third choice you may want to consider. Keep reading to learn more.




Want to manage your payroll in house, but don’t have the right tools? Let us set you up with the software you need to succeed. Visit our website to learn more or call us now at (336) 315-3935.

By: Laura Schomaker, Intelligent Technologies Inc., a Microsoft and Acumatica partner.


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