Why Your Company Should Insource Payroll Instead of Outsource

For small businesses with minimal staff, outsourcing might seem like a good idea. In some areas, it might be a wise strategical move, conserving resources, eliminating hassles. But what about outsourcing payroll? Is that a good idea?

It may be tempting, but there are good reasons for insourcing your payroll activities. Let’s talk about some advantages and also about the tools that will make it feasible even for small businesses.

Here are four great reasons you should focus on processing payroll in-house.

1. You can save money by doing in-house payroll.

You might think you’d save money by outsourcing payroll, but perhaps you’re haunted by the days when in-house payroll processing required a department full of full-time accountants working long hours each month. With modern technology and payroll software designed to work with your ERP (Enterprise Resource Planning) solution, payroll can be quick and easy.

When you outsource your accounting, the costs and fees add up quickly. There’s usually a base fee plus per-paycheck or per-user fees. You’ll also pay extra for tax-related services or custom reports. Over time, these prices will go up (as all prices do) and you’ll have no control over it.

With integrated accounting software, you can do complete payroll processing as well as employee self-service and HR onboarding all in one familiar system. In the long run, the software will pay for itself.

2. You will control your processes and data

Insourcing payroll allows you much greater control over your data, processes, and reporting. Data security is being threatened now more than ever before. Don’t take a chance on having someone else’s breach impact your company.

You’ll keep sensitive information about salaries, benefits, and work status in your own company guarded by your security. Avoid problems with other people’s security systems, of which you may know nothing. Fewer custodians of your data mean fewer opportunities for leaks.

You can also make last-minute changes as needed when you insource payroll. If you need to add overtime or adjust shifts, you can do it quickly and easily and still pay everyone on-time. Processing payroll in-house gives you a lot more flexibility.

3. You can spot errors before they mess up the whole process

If you rely on outsourcing, your payroll process is in the hands of someone who doesn’t know the details about how your business works. They may not recognize when something doesn’t look right.

Your in-house employees know how your company operates and they’ll be more likely to spot anything that is out of place and fix it before paychecks are sent out. Catch errors early; avoid unhappy staff. Waiting until an employee reports a problem with a paycheck will create a lot of extra work. You have to investigate the problem and find out what happened. The payroll has to be corrected and the correction has to be added to the next paycheck. You may need to correct automatic filings with the IRS. It takes a lot of time — and if you’re outsourcing, you have to do it on their schedule, not yours.

4. You will be the top priority

When you outsource your payroll, you may be at the mercy of a company with many other clients. Sometimes your processes, corrections, or questions will have to wait while they handle other customers.

If you insource your payroll, however, you’re the top priority. You don’t have to wait until a third-party payroll processor gets around to your concerns. Don’t make your employees wait weeks and weeks while another company looks into payroll errors and corrects them.

In-house, you can take care of everything when you need to. The right payroll software makes it easy to handle payroll processing, ACA compliance reporting, federal and state tax filings, and more.

You’ll save money, protect your data, spot and correct errors efficiently, and you’ll always be top of the list when it comes to resolving concerns. It’s nothing but a win for your company and your staff!

This content first appeared on ERP Software Blog Why Your Company Should Insource Payroll Instead of Outsourcing by Integrity Data.

The ERP Software Blog is a group blog project of Microsoft Dynamics ERP Partners, providing comparisons and opinions to professionals in the ERP/Accounting software selection process since 2009.