Pros and cons of payroll processing in-house


Payroll service providers free up your resources


One thing many new business owners don’t realize is how many tasks accompany starting a new company. Things like payroll, human resources and other administrative duties are necessary, but they don’t directly move your business forward in terms of adding revenue or helping your bottom line.


Perhaps the most time-consuming and labor intensive of these tasks is payroll processing. Instead of focusing on business development, product innovation or training a great team, many business owners find themselves mired in the doldrums of payroll calculation.


When this happens, an owner usually chooses between hiring someone or some people to perform internal payroll operations. Small businesses might push this task on their human resources team or hire someone to do payroll and other administrative tasks, while large companies sometimes house entire payroll departments.


Choosing to delegate payroll duties to an existing employee and/or add another person or people to your payroll to process payroll is one option, and the other is to outsource your payroll process to a company which specializes in processing.


Our company is based right here in the Bay Area, and we have been helping business owners in San Ramon and across the nation take back control of their businesses for years. We offer several administrative processes, including payroll, human resources and more.


There are a few key differences which owners should take into account when deciding to handle payroll in-house or use a service like ours.


The first difference is somewhat obvious, but has a definite benefit for outsourcing. In-house processors are employees of your company, and an outside provider is not.


The layer of separation here is important, because it gives you a release of liability and removes a potential conflict of interest. Payroll errors, if done in-house, open you up to legal action and there is a greater chance of fraud occurring when the people processing payroll work in the same company as the people they’re paying.


In addition, using an outside provider allows your team to remain smaller and can allow your employees to focus on more important tasks. Many times, payroll is delegated to someone who is already in the company, and most people don’t realize how much time, energy and research goes into payroll calculation.


If you have an employee trying to do another job and calculate payroll, or even if you have a dedicated payroll person who is processing payroll for a large team, it’s possible they can become overwhelmed by the volume of calculations to be made, laws to stay current on and variables like withholdings which accompany every employee’s paycheck.


In-house processors are more likely to make errors, in part due to this overwhelming effect but also because outsourced providers have superior software solutions in place and their employees are experts in the processing field.


If you are at a crossroads and considering whether to bring payroll in-house or outsource it, we would be happy to meet with you and determine if outsourcing could be beneficial for your business.


Social Post: Beyond whether or not the people doing the work are employees or not, there are some key differences between in-house payroll processing and outsourcing the service. We look at a few of these in our latest article, and help you determine if outsourcing is right for your business.