Payroll in a crucial part of any business. After all, you need to make sure that your employees get paid on time.
When you run a company, there are a million details to keep track of each and every day, but paying your employees should be at the top of your list of priorities. Yet payroll can be complicated and take up lots of valuable time that could be spent on other areas of your business.
In this article, we take a look at the difference between payroll outsourcing vs in-house payroll. Both have advantages and disadvantages, so keep reading to see which of the two would be the best choice for your company.
In-House Payroll Processing
This is the traditional method of processing payroll for employees. It requires employing an experienced bookkeeper with the skills to handle payroll for a small to medium workforce, such as 20 or fewer employees. In-house processing requires payroll software and can be cost-efficient if operated properly. Here are the pros and cons:
Having your own in-house payroll department gives you easy access to employee payroll data. This can be great because it saves time. And the focus of your accountant will remain solely on your business rather than multiple accounts. This guarantees every possible angle is covered when it comes to such aspects as taxes and benefits.
There is also a privacy benefit to maintaining an in-house bookkeeper. Thus you are able to limit the number of eyeballs that have access to employee payroll information.
The reality is that maintaining an experienced bookkeeping team is expensive. And because the tax code is updated each year, you must pay for constant training so that your payroll department is able to remain informed about changes.
Outsourced Payroll Processing
Outsourcing payroll processing has become increasingly popular in recent years. Yet as with having an in-house payroll department, there are pros and cons.
One of the key advantages is not having to employ full-time bookkeepers. This saves on both salary and benefits. As mentioned earlier, employing a payroll department isn’t cheap.
Another huge benefit of payroll outsourcing is that you are hiring a company that specializes in tracking the latest tax regulations. This also provides the power of an entire payroll company serving your needs rather than having to depend on the limited knowledge base of a smaller team.
The biggest disadvantage of outsourcing your payroll processing is access to payroll data to make last minute changes. Such as when employees work over time.
And though you might have concerns about employee privacy, most outsourcing companies make privacy their top priority.
Payroll Outsourcing vs In-House Payroll
As we’ve seen, there are some clear differences between payroll outsourcing vs in-house payroll. Deciding which one is best for you is mostly a matter of the size of your business, and how much you’re willing to invest in employing your own in-house payroll staff.
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