If you own a small business and you employ one or more people, payroll is part of your responsibilities. Because handling your own payroll can be overwhelming if you don’t have the time or resources you need, you may decide to outsource this task to a third-party provider. Here are some of the pros and cons of outsourcing your small business payroll:
Pros of Outsourcing
Some of the advantages of outsourcing your payroll responsibilities include:
- Improved accuracy - When you trust a reputable provider to handle your payroll, you may enjoy improved accuracy. Your payroll provider has the knowledge and expertise to make sure that all tasks are completed properly.
- More time- When you don’t have to complete payroll on your own or assign this task to staff members, you and your team will have more time to focus on other more important tasks, which improves productivity.
- Fewer resources used- If you try to handle your own payroll, you will expend resources as you print checks, create reports and perform other essential payroll functions. However, if you outsource these responsibilities, you won't expend as many resources, which can save your company money.
- Better regulatory compliance- Professional payroll providers are familiar with all of the regulations that apply to your small business. They can make sure you are in compliance with these regulations at all times so you won't incur fines or deal with other problems.
- Less hassle, greater peace of mind- Outsourcing provides you with more flexibility. For example, while you are away enjoying your vacation, the payroll is still being processed and employees paid in your absence.
Cons of Outsourcing
- Extra expense- If you choose to outsource payroll responsibilities, you must pay a fee for this service to your provider. Although this fee varies, it does add to your overall costs. You may save some money on resources, such as paper and ink, but you may still experience a net loss.
- Difficulty obtaining important information - When you outsource payroll, your payroll provider will have control over the information collected during the payroll process, such as important data related to your employees. If you need access to this data, you will have to request it from the payroll provider.
- Risk of loss - In some cases, payroll providers suddenly go out of business. If this occurs, you may lose access to important information, as well as suffer other losses. You may also deal with payroll delays while you are looking for a new provider. You can avoid this problem by choosing a reputable provider with a long history of providing good quality services.
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