Payroll: Should You Self Manage or Outsource?


When business owners talk about payroll services, they are mostly concerned about saving cost and making sure that their employees are completing tasks that directly increase the productivity and sales of the organization. Here is a comprehensive analysis of whether you should outsource or self-mange the payroll services. Let’s take a look.

Why Should You Manage it Yourself

When you have a small company, it is understandable that you don’t want to go through the effort of identifying reliable and trustworthy sources to outsource your payroll department. An in-house department can easily manage 1-50 employees. However, when you are mangling employees whose number is closer to a couple hundred, you should consider in-house services for payroll generation. Payroll experts are costly and normally, unnecessary. You might think that bringing payroll and compliance under you wing has some benefits but they should be focused more on compliance and less on payroll taxes. If you do want to self-manage your payroll, you will save a lot of cost and have better control of your information, reporting and processing.

Why Should You Outsource it

Most business consultants and financial experts have often advocated the outsourcing of non-core business functions. This means that all functions that don’t produce any profit for your company directly should be outsourced. It has been a long standing debate as to whether you should consider outsourcing your payroll or not. Many say that this is a function that doesn’t differentiate you from your competitors or is strategically important from a business point-of-view.

This kind of back-office, invisible, administrative and behind-the-scenes activity is a potential candidate for outsourcing. However, many still ask whether it is worth the time and effort? Is it worth it to investigate appropriate services for outsourcing payroll? If you have 500+ employees, your HR department should only be focused on finding quality workforce, complementing strategically important and profitable projects and providing liaison services to different employees. The menial task of payroll generation should be outsourced.

However, there are many benefits that arise from outsourcing your payroll functions. Some of the most important ones are given below;

  • It allows you to focus your time, energy and resources on other core functions in your company.
  • It can help you reduce the costs and risks associated with it.
  • It allows you to free up most of your technological experts to focus on other areas of your business.
  • You have access to better technology and wide-dimensional expertise that will be able to perform well in the payroll department.
  • Payroll generation is a function that doesn’t actually help you increase sales directly but if it is carried out poorly, you can end up in a world of pain. Outsourcing payroll generation can help you save your the time and effort which you can dedicate to core tasks.
  • Moreover, most businesses need to comply with a number of laws, either federal or state laws, that have to be followed. This can take a lot of time and attention. You will also need to follow legal requirement to the point regarding tax reporting, submissions and remittance.
  • New-hire reporting is another worry that most employers face as well as worker’s compensation insurance and unemployment compensations, all of which can be a real headache for a business owner if they decide to choose in-house payroll generation.
  • Last but not the least; when you do choose to outsource payroll services, look out for the track record of the service, their complimentary offerings, security and reliability factors, technology, experience and the accountant interface. The research you do in the initial stages of your relationship with an outsourced company will save you a lot of trouble at a later stage.
About Carson Derrow

My name is Carson Derrow I'm an entrepreneur, professional blogger, and marketer from Arkansas. I've been writing for startups and small businesses since 2012. I share the latest business news, tools, resources, and marketing tips to help startups and small businesses to grow their business.

Speak Your Mind

This site uses Akismet to reduce spam. Learn how your comment data is processed.