Should I Outsource My Payroll?

Payroll is one of the departments that is often outsourced in many businesses

. It seems like an easy enough job that just about anyone can do it. There are certainly some pluses and some minuses involved with this process that you should carefully consider. Lets start with the pluses.

The first and most obvious advantage to outsourcing your payroll is that it will likely cost your company less money to pay someone else to do this job. You could outsource this work to another company within the United States or even in another part of the world where you could pay less. This is known as a cost savings for your business and is the most likely reason why you would consider outsourcing.

Another reason why you might consider outsourcing is so that you don't have to house the payroll staff that you would have to if you did the job in house. This means that you might outsource to avoid taking up space by hiring a staff to do your payroll for you. Plus there is always the conflict that those who are doing your payroll are also on your payroll which can be tricky. In this case it may be easier to simply have an outside body doing this roll for you.

Despite these advantages, there are some drawbacks to outsourcing your payroll

The first issue with outsourcing your payroll is that you need to make sure that you get the best possible professionals to handle this job. Payroll is one of the most critical parts of your business that you seemly cannot afford to have a mistake in. If you outsource this job, then accountability can become a real issue. You must make sure that you hire a company that has a strong track record and that you can trust. Otherwise, you may end up having to pay fees and penalties if a mistake is made.

Another issue that could come up relates to the first issue. If you get an outside hire for this job, then you are going to need to make sure that they understand all of the rules that your company is responsible for. What this means is that they need to know what kind of things need to go into taxes and which ones are pre-tax. There are a lot of state and federal regulations that could apply, and you have to make sure that your payroll service completely understands these. Having an outside payroll service can make this process much more difficult.

There are some advantages and some disadvantages to outsourcing your payroll. It is best to lay everything on the table and see if the advantages outweigh the disadvantages for your particular company.

by: Jamie Simpson

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