Benefits of Outsourcing Payroll

Man's hand on clock

Outsourcing payroll saves your employees significant time.

Payroll has long been one of the most commonly outsourced business functions. Doing payroll in-house may be sustainable for larger companies that have a team of in-house accountants to manage complicated payroll tasks but, for small to medium sized businesses like yours, it is often better to outsource. Payroll is one of those things that a company must get right. Employees must be paid accurately and on time, and your company must adhere to regulations to avoid incurring any penalties. Keeping up to date with current payroll laws and procedures is not easy and is yet another one of the many reasons so many companies like yours have been outsourcing payroll for so long.

There are a number of reasons why your company may choose to outsource. Here we dive deeper into the benefits of outsourcing payroll.

1. Save time

Saving time  is the primary reason most companies opt to outsource their payroll function. Payroll takes up enough time when things are running smoothly. However, when things go wrong, and inevitably they will, your employees start to clock serious hours. This is time that can be spent on other important aspects of your business. Reports have shown that small business owners spend upwards of six hours a month on payroll; that is seventy-two hours a year or two full work weeks! Imagine how much you could improve customer service, research your markets or improve business operations with that time.

2. Save money

Yes, you must pay for the privilege of outsourcing your company’s payroll but in the long run you will save money. The time and resources it takes to effectively manage a business’ payroll must be assessed correctly. When you outsource payroll you save money through the elimination of  payroll software and the reduction in staff time or personnel  who manage the payroll. You also eliminate or drastically reduce the cost involved in tracking, filing and processing  payroll documents.

3. Avoiding penalties

Payroll-related mistakes are some of the most common mistakes made by businesses today.  The governing bodies make regular changes to taxes and regulations involving employee pay; failure to keep up with these changes can result in penalties for your business. Outsourcing your payroll means you place your payroll management in the hands of specialists specifically trained in this area. It is their job to remain aware of changes and issues  that affect a company payroll processes. By employing these experts you minimize the chance of something going awry. If something does go wrong, your employees will not have to spend valuable time going through the files with a fine tooth comb.

Not many people consider the hard work and many different processes involved in ensuring employees  are paid on time. It is up to every organization, big and small, to ensure they have a system in place to properly manage payroll. Because payroll management is a timely and costly process with little strategic value, owners and managers should strongly consider  the advantages of outsourcing.

About the Author:
Carlo Cretaro is a freelance blogger and social media consultant for a range of Irish and UK businesses. This article was written on behalf of BJ Kenny Accountants which is an accountancy firm based in Dublin.

  • Kristina Smith

    Well, outsourcing payroll really helps in many ways especially it saves your time and you get a Managed payroll service with no hassle but still you need to go for a reliable payroll service provider.

  • Kristina I agree. If you choose the wrong payroll service provider, you’ll likely encounter more issues than if you simply did it yourself so finding the right one for you and your business is key.

  • Outsourcing something that is financial related is really risky. But then again it can help you get away from a huge workload in your operations. Before going for financial or payroll outsourcing better check if it will compliment the needs of your company.

    • Companies outsource payroll all the time. However, you are correct, it is very important to outsource to a highly reputable source for any financial-related activities. Do your homework. If it is a smaller, unknown vendor, check D&B, BBB, do a Google search, check references, and check with the bank they use to transfer funds from your payroll account.

  • Zaid Al Mashari

    One more to add – you get a specialized services, as the agency to which the work is being outsourced specialises in payroll process.