Should You Manage Your Payroll Or Hire A Third Party?

If you’re a small business owner and payroll is a pain for you, then you have probably started thinking about outsourcing it. It could be a good idea depending on your needs and the structure of your business, but you shouldn’t automatically assume that it’s the best option.

There are obvious benefits to outsourcing a function as complex as payroll but keeping things in-house will ultimately give you more control. You should also know that various tools can take much of the headache away from payroll management.

Let’s take a closer look at some of the pros and cons of keeping your payroll in-house vs outsourcing so you can make a more informed decision.

Outsourcing Payroll Saves Time And Trouble

The biggest benefit of outsourcing your payroll is that it will allow you to focus on what you do best. If you have no experience doing payroll and you decide to do it all on your own, you could be spending hours and hours figuring things out.

That’s time you could’ve dedicated to acquiring more clients and working on functions that would bring profits to your business.

Managing Payroll In-House is Less Complicated than it Used to Be

Managing payroll in-house is nothing like it used to be. Managing payroll manually is extremely inefficient and if you tried doing it that way, we can understand why you’d want to outsource.

But before you do, check out some of the new payroll management platforms that are being released, as they’re becoming increasingly user-friendly.

Some of these platforms will handle everything from deductions, direct deposits, general ledger reporting, dynamic mobile paystubs, and more.

The good ones will also seamlessly integrate with your current accounting and 401k platforms and help you stay compliant, so give them a look today.

Outsourcing Payroll Could Help Some Businesses Save Money

If using a payroll platform is still too complex for you, then you could save money by going with an outsourced payroll solution. Hiring someone simply so they can take care of the payroll for a small to medium company is usually a bad financial decision.

There is no way that you’ll be able to employ that person fully, and you’ll probably have to appoint them to other tasks to fill their time. In-house payroll usually works better for large organizations, and even then, many of them decide to outsource it. So, think twice about adding someone to your payroll just so they can manage it. Even in buying insurance, you should have a business insurance review for the company’s sake.

Payroll Companies Still Make Mistakes

Don’t assume that your books will be totally safe when dealing with a third party. If they make mistakes with tax reporting, for instance, some of it will fall on them, but you have to be ready to bear repercussions as well. This is why you’ll still need to look over your books and make sure that you hire a reputable team with a long verifiable track record.

As you can see, choosing between outsourcing payroll or handling it on your own is not a clear-cut decision. You need to look at the benefits and disadvantages of each option and look at various solutions before you make your final choice.

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