Outsourcing Vs In-house Payroll

Jul 23 • Business • 466 Views • Comments Off on Outsourcing Vs In-house Payroll

Any company that employs staff has to manage payroll. For some companies, running payroll in house by buying dedicated software and employing payroll staff is a viable option. For other companies, there are a number of reasons why outsourcing payroll activities is the best option. Some of these reasons are explained below.

Costs
If your company is small or medium sized, outsourcing can help you to cut costs and keep your head count down to a minimum. In addition, it allows your staff to focus on your core business. Companies which provide payroll services often benefit from economies of scale, meaning that they can pass on that benefit to you in terms of cost savings. Payroll activities do not run for the entire month. This means that employing someone full time to carry out an activity which is only carried out once or twice a month is wasteful. Therefore, outsourcing payroll and only paying for it when you need it has obvious cost advantages.

Expertise
By outsourcing payroll, you gain access to a level of expertise which may be lacking in your company. Companies which specialise in payroll services have trained, dedicated staff who have the level of expertise in the field which is necessary to run payroll efficiently. In addition, legislation regarding payroll changes constantly. By outsourcing it, you are able to keep up to date with these developments and keep within the law without having to invest money in extra staff and software which regularly sends you updates. You can offload your payroll to the service provider completely, or you can opt to send some work to them and retain some of the work for yourself. It all depends on your unique requirements and most service providers will tailor a package which best suits your company.

Staff
In-house payroll staff require on-going training on the latest legislation which can be costly. In addition, in-house payroll staff must be able to apply any legislative changes to the unique situation of your company and know which parts of the legislation are relevant to your business. All of these things cost money and take time; precious resources which can be used elsewhere if payroll is outsourced. In addition, staff fall sick and need holidays. Payroll must be run regardless of an individual person’s situation. In a small company you may only be able to hire one person to take care of payroll. Payroll is a massive undertaking and responsibility for just one person to take on. By outsourcing, you do not have to worry about things like staff sickness and workload for payroll staff.

Software
Apart from requiring expert staff, payroll requires a significant investment in hardware and software. In addition, experts are needed to set this up properly, and experts cost money.

Accountability
By outsourcing payroll processes, you hand over responsibility to the service provider and reduce the amount of time you have to spend dealing with the HM Revenue and Customs, among other government agencies. In essence, by handing over your payroll processes to a service provider, you manage them and they are accountable for processing your payroll accurately, within the law and in a timely manner.

This post was written on behalf of SnowdropKCS, leaders in payroll and HR software.

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