Written by Stewart Waddell
Published on October 21, 2013

Very few business owners or managers will say that payroll management is one of their favorite tasks, but when does it make sense to outsource payroll operations? Here's a quick look at the top reasons that businesses turn to payroll services providers.

1. Finance.

Large companies can afford to employ large payroll departments. For small businesses, however, an in-house payroll service is financially counterproductive. If your business has less than 20 employees, there's a fair chance that you can save money by outsourcing your payroll. It is easy to see why; when you think about how many hours your employees spend doing in-house payroll and the cost of it and then compare the amount to services offered by payroll providers.

2. Precision.

Payroll mistakes can be painful, angering employees and, somewhat more worryingly, the government. A good payroll service provider is going to be much more accurate and far less likely to make a serious error than your in-house staff because they do it for a living, all day, every day.

3. Productivity.

Payroll processing is a time-consuming job and so with this duty removed, your employees can focus on doing things more relevant to your company, and you may even be able to cut down on the amount of staff you actually need.

4. Consistency.

Because a payroll services provider has a full dedicated staff that only do payroll, your payroll won’t get missed if someone has a holiday. If your in-house payroll staff calls in sick then the payroll can become very unreliable, and you will then have to take the time to teach another staff member the system.

5. Accountability.

If paychecks are delayed or paperwork is mishandled, your payroll provider is to blame. If your provider can't (or won't) make things right you can sue. You can also switch to another service provider quicker and easier than hiring and training a new in-house payroll staff member.

6. Fraud.

Money Laundering can happen easily without you even realising it. It probably won’t be the fault of the staff member processing your payroll, and they may have not even picked up on it. Most payroll providers have technologies that can spot and alert clients to various types of payroll fraud, such as payment manipulation and "phantom workers." This gives you the security to know that you payroll is legal and above-board.

7. Stress.

Payroll processing can be very stressful, full of pitfalls and an unnecessary cause of stress. If you outsource to a payroll provider it can give you peace of mind and let you concentrate on running other aspects of your business.

8. Knowledge.

A good payroll provider will know all the ins and outs of payroll-related tax laws and regulations, not to mention ever-changing Minimum Wage rates, benefits and deductions. If your in-house payroll staff were to try and achieve the same level of expertise it would be very time-consuming and costly.

9. Flexibility.

Payroll service providers have a wealth of knowledge and expertise. Whatever your payroll requirements they are likely to be able to accommodate you, whatever your problem they are sure to have come across it before and have a suitable solution. Unlike most employers, they can also accommodate a temporary influx of seasonal workers without acquiring new systems that will remain dormant the rest of the year.

10. Speed.

Since payroll service providers are specialists in their field, with all the high-tech resources at their disposal, they can process even the most complex payrolls with high speed while maintaining accuracy.