Human Resource

Outsourcing of payroll is the solution for your business

There are plenty of ways to produce payroll each period. In this article, we’ll discuss the ways to process payroll: manual bookkeeping, in-house bookkeeping or software, and hiring a professional payroll provider. photo credit: RambergMediaImages

There are alternatives for managers and business owners. Each one has its benefits and level of time commitment. There is no “one-size fits all” answer for every business.

However, some are better than others. By the time you’ve finished reading the pros and cons of these alternatives we are confident that a professional payroll provider is the solution for your business.

The Payroll Department of “You”

Sometimes business owners forget that payroll is a major function. When most businesses start, the entrepreneur takes on many of the details of running the business. This includes payroll most of the time. This is major administration!

Taking care of payroll is not the same as making a sale or paying for a delivery of goods. We are talking about painstaking detail. Payroll processing is a detail that doesn’t go away. It is there pay period after pay period.

Sometimes, doing your own payroll is a good idea but in the majority of business situations it is not a good use of your time. An entrepreneur should be working toward creating cash flow not the minutia of payroll, right?

The Payroll “Department”

When a business owner gets tired of doing payroll they usually assign the task to one or more employees. Most of the time, it is an add-on task for the office manager or bookkeeper. They think that they will save money by doing the payroll processing “in-house”. However, this option does have risks. These risks include data security, business productivity, and providing an accurate payroll.

One of the first things to consider is whether you are comfortable allowing an employee to access your businesses sensitive and private information. Anytime you allow this kind of access you open yourself up to identity theft, embezzlement, and the altering of company records for personal gain.

An even bigger risk is misreporting. Failure to report correct employment taxes to federal or state agencies can cost you big in penalty fees. Are you prepared to squeeze out unnecessary, unanticipated fees from your budget?

“We’re Savvy” Computer Payroll Software

Computer savvy business owners and managers who like to perform data entry and watch numbers might consider this option. Payroll software streamlines and automates (partially) the payroll process. A good package integrates payroll with the rest of your businesses financials. Most have “wizards” that help you set up employees, wages, hours, and accurately calculate payroll. Plus, they also contain federal and state agency reporting forms.

Sounds great for a do-it-yourself business owner, right? Hold on! Using software for payroll does not ensure that the latest government rules and regulations are in place. Remember, the onus of compliance is on the business owner not the software company you bought from. Tax rates may be outdated or you may just input bad data. Either way, any mistakes are your problem.

Keep in mind that using software does not eliminate manual payroll calculation. Sometimes you must gather information, make sure there are no errors, and do manual payroll calculation. Another thing about software is security. You have your payroll data on your machine(s) or network and it is vulnerable in the same way mentioned in the previous section.

Payroll Outsourcing

Professional payroll providers like provide some obvious and even hidden business advantages. Some business owners think that payroll providers are expensive and intrusive but that is just not true.

Business owners that choose to outsource their payroll essentially buy back their time. Time is money, right? You and your employees gain time to add to tasks that mean something to your bottom line. Why not use your time to get more sales, start new projects, or work on marketing? What if you just want a break?

Payroll providers offer you professional talent. They are experts in payroll, payroll tax, reporting and remitting to federal and state agencies. They make it easy for you. After wages and deductions are set up in the system, business owners just contact their customer service representative once a pay period. The payroll calculates automatically and the current rules and regulations apply.

Ever spent loads of valuable time hunting for keying errors? We have. If you use a professional payroll provider, customer service representatives handle all of that. They also make the records available to you in hard copy or online.

Speaking of online, business owners that prefer software solutions can still hire out. Online payroll doesn’t require software install and upgrades to users at the same time. Plus, you can also allow key personnel like your CPA or tax-preparer to access your company’s online account. Forget about hunting them down, faxing, or mailing them documentation.

Online solutions also house payroll data through multiple secure servers and have backups running constantly. This type of data security is out of reach for most businesses. When you choose a publicly traded company like for outsourcing payroll, you are assured that your data is protected by state-of-the-art hardware and software technology.

Ok, so we still haven’t talked about cost. Time and cost analysis should be performed, right? Start with the time it takes to calculate payroll each pay period and remitting payroll taxes to federal and state government. Next, add in the cost of generating reports in-house and for your accountant. Dig even deeper and examine time and expense associated with payroll generation. How much does each check cost to cut? How much time does it take to get signatures and distribute paystubs? What about answering employee payroll questions? Never underestimate the time and expense of researching answers. How much will you pay in fines for delinquent payroll tax payment? We think you get the idea. There are loads of costs you must consider.

After it is all said and done, you’ll be surprised how much cash you save using a full-service outsourcing of payroll provider like

For additional information about Paychex Outsourcing of Payroll services, do check out these whitepapers as well:

About the author

Bob Lee

Hi! My name is Bob Lee and I’m a web developer / technical writer who specializes in developing and reviewing web applications. As an entrepreneur, blogger, developer, and tech enthusiast, I have been in this field for more than 10 years, and have been loving every minute of it.

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