It’s not uncommon for businesses to outsource payroll functions. Thanks to technological advances, payroll is becoming increasingly easier to conduct internally. To help you make this decision, here are the benefits of keeping payroll in-house instead of outsourcing this function.
Benefits of Internal Payroll
Whether you hire someone on your staff to handle and manage payroll or you’re using software to do payroll yourself, keeping payroll internally has the following benefits:
- Access to Data. You have immediate access to your financial information whenever you need it as opposed to asking someone else to retrieve this data.
- It Can Be More Affordable. For small business owners, it may be cheaper to conduct payroll themselves or hire someone part-time instead of outsourcing payroll.
- You May Already Be Doing the Work. You may already be the person issuing checks and maybe someone has already been keeping track of employee hours or filing the proper tax forms. Why would you pay someone else to the work that you’re already doing yourself?
Benefits of Outsourcing Payroll
For larger enterprises, they can easily sustain a payroll division. This may also be the case with small business owners who opt to outsource their payroll for the following reasons:
- Accurate. Payroll mistakes happen frequently and business may not be aware of tax codes. Payroll experts are aware of all the tax codes and are up-to-date on any changes, they can also easily correct any errors.
- Saves Time. Business owners, large or small, may not have the time to devote to handling payroll themselves. Outsourcing payroll allows them to stay focused on running their business.
- Could Have Long-term Savings. 46% of small business owners have reported that they spend between $100-$500 per month on an outsourced payroll company. In the long-term, this could be more affordable than paying a monthly fee for a payroll software, hiring someone to coordinate payroll, or the added concern of learning all of the varied taxes and rules involved with payroll.
There are pros and cons for both keeping payroll in-house – or outsourcing it to another company. When deciding to figure out which option you should settle on, make sure that you consider what works best for your business. How many employees do you have? Do you multiple locations? What business structure is your business? Do you offer benefits? A small business owner of five employees probably does not need all of the robust features of ADP.
You also need to think about the costs. Spending $1,500 for payroll software is extremely pricey for a small business owner who may be able to outsource their payroll at a better rate. Are there an additional fees that you’re not aware?
If you’re still uncertain, select a payroll software provider and give it a trial. If the service satisfies your needs, then keep using it for your payroll moving forward. If it doesn’t work out for, you may want to outsource your payroll.