When an entrepreneur asks, “should I outsource my payrollâ€, it often requires a long, close look at several different aspects of the company in order to determine the best method for handling how payroll is processed.If outsourcing your company’s payroll is something that you’re considering, you’ll also have to take a look at just who you go to in order to have your company’s payroll processed.
When asking the question, the how, why, and who are all equally important and should be weighed as such so that you can be sure you’re doing what is absolutely best for your company and your employees. So let’s take a look at some of the factors that should influence the answer to the question of “should I outsource my payrollâ€, and you’ll see why this is a decision that shouldn’t be taken lightly.
How Much Free Time Do You Have?
The time that it takes to process payroll is most likely one of the biggest reasons that you’re looking at whether or not you want to start outsourcing the practice. How much time it takes to do payroll can depend on things like:
- The size of your staff
- Deductions and other exemptions that need to be calculated
- How much verification of the information present will be required
It’s no secret that payroll can be time consuming, but is the time that you dedicate to your company’s payroll now significant enough that it’s impacting the efficiency with which you do business? When considering the factor of time, it’s important to look at how much of it is being spent doing payroll now and asking yourself if having an outside company that specializes in payroll solutions would be a more efficient way of doing things.
How Confident Are You In Avoiding Mistakes?
Have you ever had significant issues with payroll processing in the past? Mistakes made in payroll calculation can anger employees, cost time to go back and correct and, in some cases, bring about government scrutiny if the mistake is significant enough. The frequency with which these things happen as you process your company’s payroll in-house should be a deciding factor in whether you outsource you payroll or choose to handle it within your own company.
How Important is Reliability?
When you have a person in your own organization who handles your payroll, what do you do when they are sick or on vacation? If you’re asking “should I outsource my payroll†and your company’s payroll hinges on the work of a single person, you’ll need a plan in place for their work to get done when they aren’t around, at the very least. If someone covers for that person, you may notice a difference in output speed and quality of work right away.
Know Your Options
Whether you decide to outsource your payroll or keep it in-house, it pays to know that you have several options as to how it gets done. Among those options that will help you answer “should I outsource my payroll†are:
- A Certified Public Accountant (CPA) – In some instances, a CPA could be your best bet when you’re looking to answer the question of “should I outsource my payrollâ€. If you already have a good working relationship with a CPA, then it’s just a matter of getting in touch with them to see if they provide this service as well.
- Dedicated Payroll Companies – A quick online search will show you a wide range of companies that offer payroll services and other HR solutions for companies who are looking to save money. If outsourcing your payroll is something that you’re set on, then it may be worth your while to get in touch with one such company and using their services.
- Money Management Software – If your payroll is something that you still prefer to do on your own, you can use personal finance software like Quicken or any of the other many options that are available to entrepreneurs for the purpose of money management.
When it comes to answering the question of “should I outsource my payrollâ€, it helps to weigh the risks versus the rewards of doing so. While having someone else handle the job of processing your company’s payroll can allow you to conduct mission critical operations more freely, it’s important to keep in mind that having outsourced payroll may be counterproductive for larger operations that would be better off with their own internal payroll departments. Likewise, outsourced payroll companies could potentially face problems. If unique situations with your company’s payroll arise, you could find yourself taking more time to deal with it than you would have had to if you processed payroll internally.
At the end of the day, you have to look at all of the reasons why you are considering outsourcing your company’s payroll and determine whether keeping payroll processing internal or leaving it someone else is the more sound financial decision.
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I think outsourcing payroll is extremely cost effective, especially for a business that does not have the capacity to hire a fulltime payroll staff. The only downside I see is if there is a discrepancy, the resolution may not come as quick as if the payroll was done in-house. Personally I try not to outsource too many tasks and duties to other companies, it does add up in costs and you don’t have as much control as if it were done within the company.
Peter Cord
Direct Digital Supply
If you really think that it’s taking too much of your time then you maybe can consider outsourcing it so you’ll be able to focus on more important task.