The US payroll outsourcing services market was worth $4.8 billion last year. Are you considering outsourced payroll but aren’t sure how it compares to doing payroll in-house?
Learn more about the differences between in-house and outsourced payroll here. Find out the pros and cons of each approach.
You’ll then be able to choose the method that’s right for your business.
What You Need for In-House Payroll
To keep your payroll in-house, you need someone in your business to manage payroll-related functions. These duties include:
- Calculating wages and overtime
- Managing deductions for benefit contributions
- Calculating and issuing paychecks
- Handling taxes
- Keeping your business compliant with local, state, and federal regulations
Technology helps your payroll staff with these tasks. Programs like Excel, industry-specific software, or apps are some of the options.
How Outsourced Payroll Works
Instead of having your own payroll department, you can partner with a payroll service provider. The outsourcing services vendor will handle as much or as little of your payroll process as you choose.
Payroll service providers can calculate and issue paychecks, withhold money for taxes and benefits, and ensure your business’s compliance with regulations. A payroll service provider can also file and pay your taxes.
Pros and Cons of In-House Payroll
In-house payroll has some advantages, depending on the structure of your business. It has several disadvantages too.
Pros of In-House Payroll
The main advantage of doing payroll yourself is that you keep control over the process. You also don’t have to pay a vendor for payroll services.
Your payroll person knows the ins and outs of your business. The reaction time for finding errors and fixing them can be faster.
Cons of In-House Payroll
Payroll processing is time-consuming. It takes time away from your core business activities.
You’ll need to pay an employee to manage your payroll if you don’t do it yourself. You’ll have the cost of salary and benefits as well as fees for software and implementation.
Doing payroll in-house also puts you at risk for processing errors and delays.
Pros and Cons of Outsourcing Payroll
Outsourced payroll can streamline your business operations. Although it has a few negatives, it brings many advantages to you and your business.
Pros of Outsourced Payroll
Outsourcing payroll leaves you more time to focus on your main business priorities.
Your payroll process is also more accurate. You can be sure your employees will receive their pay on time. You have access to multiple payment options, including direct deposit.
The payroll provider will handle your payroll taxes and benefits. You’re less likely to violate any government regulations.
Finally, professional payroll firms have high-quality security systems and encryption to keep your sensitive data secure.
Cons of Outsourced Payroll
Outsourcing payroll means you don’t have direct control over the process. You’re dependent on a third party for access to your data.
You also have to pay the provider.
In-House vs Outsourced Payroll: The Bottom Line
Keeping payroll in-house may seem like it will save you money. The cost of your time, payroll staff, software, and potential errors quickly add up, however.
Outsourced payroll gives you back your valuable time, letting you focus on your core business. It also keeps everything secure.
The Accfin Group is ready to be your payroll partner. We’ll handle your payroll process in an accurate and timely manner. We can deliver personalized, effective, and flexible financial services no matter the size of your business.
Contact us today for a free consultation.