Should You Outsource Your Payroll Duties?

Erin Steiner is a freelance writer from Portland who covers a variety of topics including those related to payroll outsourcing.

Payroll outsourcing is something that many business owners struggle over. Should they do it? Should they keep the payroll duties in-house? What about small business taxes? Here are some of the pros and cons of outsourcing your company’s payroll duties.

PROS

1. Frees you (and your staff) up for other things.

2. Outsourcing is cheaper. A study done by SurePayroll says that small businesses with fewer than ten employees can save, on average, $2600 a year by outsourcing the payroll.

3. Reduce stress over taxes. Most of the payroll tax errors that a small business commits happen because of human error during the payroll reporting process. Sending it out reduces the likelihood of that.

4. Save yourself a lot of stress. Payroll is stressful! You need to make sure that everybody gets paid correctly and that their benefits, taxes, retirement plans, etc., get taken care of. Outsourcing alleviates the stress.

5. Very few small businesses are able to offer direct deposit simply because the process can be difficult to set up and execute. Payroll outsourcing makes you able to offer your employees this convenience because the outsourcing company will already be set up to do it.

CONS

1. Loss of control. When you do the payroll yourself, you control every aspect of it. If you outsource, you’ll have to give up that control, which can be difficult for Type A personalities to deal with.

2. Loss of privacy. The more people who handle your employees’ payroll, the more people who will have access to your employees’ private information. Keeping payroll in-house reduces the number of people who know private stuff about your employees.

3. Potential costs. Depending on which company you choose to do your payroll, there might be hidden fees you hadn’t counted on paying.

4. Technology mishaps. Outsourcing puts you at the mercy of technology. You’ll have to transmit your numbers to another company, and if the system goes down, it could prevent payroll from happening on time or accurately or even at all!

5. Bad karma. These days “keep it local” is the battle cry of all small businesses and most communities. Sending your payroll out instead of hiring someone to do it (if word gets out about this) could cause some serious bad will toward you and your company within your community.

Ultimately it’s up to you. You need to look at what will work best for you and your business and then go with that.