Lucy - BQ Magazine EditorPaying employees is an important task that isn’t always as simple as it seems on the surface. You need to make sure it’s done accurately and on time – while potentially considering different tax brackets, bonuses, deductions and benefits. It becomes particularly more demanding as your team grows. By weighing up the pros and cons, you can determine whether it’s time to outsource your payroll or continue doing it in-house.
The pros of outsourcing your payroll
It can save you time as your company grows
The bigger and more complex your workforce becomes, the more time you have to dedicate to your payroll. In-house HR staff may be able to take over this role, but eventually, there may come a point when even they get overwhelmed. Outsourcing this aspect of your business can save you a lot of time and allow you and your staff to distribute your energy elsewhere.
You can benefit from third-party compliance expertise
Staying compliant with different tax codes, deadlines, and wage-and-hour rules is essential, and often not easy – especially if you’re hiring employees from different states or countries. When you outsource your payroll, you don’t have to worry about researching all of this; instead, you allow third-party experts to handle it all for you and reduce any mistakes.
Outsourced services may have better tools
A third-party payroll service may have better tools for handling the payroll process. Your employees’ payslips may look more professional as a result, plus you may experience fewer payment errors.
The cons of outsourcing your payroll
It will cost you extra money
You will need to pay extra money to outsource your payroll. If you’re already on a tight budget, it may make sense to continue doing it yourself. Even if you can afford this service, it’s an extra bill to keep on top of.
You will have to share sensitive information
Outsourcing your payroll service involves sharing sensitive information like company and employee payment details and other personal information like addresses and dates of birth. You need to be certain that the payroll service you are outsourcing has good security measures in place to prevent a data breach.
Service quality can vary
Not all payroll companies are going to provide the same quality of service. You need to do your research to make sure you choose a company that is reputable and able to comfortably deal with the demands of your company.
Should you outsource your payroll?
Outsourcing your payroll could make sense if you’re already struggling to handle the demands of a growing team or if your payroll is very complex due to international employees, regulatory changes or complex pay structures. An increase in payroll errors could also be a good reason to look into outsourcing this process.
You may want to continue handling the payroll yourself if you still have a relatively small team or are on a very tight budget. In some cases, it may be cheaper and more efficient to simply upgrade your technology (such as using time-tracking apps that automatically convert hours) rather than resorting to outsourcing.
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