Practical Reasons To Outsource Your Payroll

May 19, 2014 2:16 pm0 commentsViews: 53

By : Peggy Emch

payroll_outsourcingPayroll is a skill that takes training and requires the utmost accuracy. The payroll process must comply with state and federal employment laws such as minimum wages, overtime rules, timing of paychecks, etc. The rules aren’t intuitive; hence, without training and ongoing education, mistakes are inevitable. Despite this fact, many companies do payroll on their own in order to save money.  But this is not always a good idea and not even always true.

If monthly or quarterly taxes are left out, you could owe the IRS or your local tax authorities a lot of money later. And if any of the subtle rules are forgotten or ignored, you might end up with penalties from the Department of Labor.

The consequence of any of those mistakes could be quite costly and far outweigh the savings of in-house payroll. Outsourcing payroll to experts helps a company avoid the lawsuits and costs associated with messing it up. According to HR World, it is not cost effective for a company with more than twenty employees to do payroll in-house. Instead, they should entrust the job to one of the many professional services available both locally and on the web.

Here are some valid points on payroll outsourcing :

  1. payrollNo More Penalties – According to the IRS, 40% of small businesses pay an average penalty of $845 per year for late or incorrect filings. Most payroll companies guarantee their work so that your business will not incur these fees, no matter what.
  2. Easy Hourly Calculations – It is more difficult to do payroll for hourly employees with changing schedules than it is to do it for salaried employees. Most companies employ at least some hourly employees.
  3. Direct Deposit – Employees prefer direct deposit. Offering this service makes a company more competitive. While this is possible to set up on your own, it is time consuming and requires management.
  4. Frequent Paychecks – Employees prefer more frequent paychecks. If you are doing payroll yourself, you are probably running payroll as infrequently as is allowed by your state.
  5. Time Sheet Data - Some time tracking services send timesheet info directly to many payroll companies in electronic form, making it even easier to complete payroll.
  6. Loss of In-House Payroll Expert – This might not be the most obvious benefit of outsourcing payroll, but if you’ve ever had your in-house payroll expert leave the company, you know how challenging and time consuming it can be for her replacement.
  7. Free Time - If you are doing payroll yourself, handing the job over to a professional frees up your time.
  8. Eliminate Frustrations - Payroll is complicated and if you are not an expert or if you don’t hire an expert professional, you will have to do a lot of reading, a lot of calculating, and make a lot of mistakes before you get it right.


Peggy Emch is the Content Manager and blogger for – a cloud-based time tracking service that makes payroll prep easy. Her expert advice can be found at the Timesheets Blog and on Facebook.


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