In the world of business, payroll can be so intricate. Even to huge companies, Payroll has been one of the most outsourced functions in business. This strategic decision relates to the complexity and ever-changing nature of payroll management that is prone to human error. No matter how small, this error leads to financial deprivation. Thus, it is often the most rational decision and the best risk management that a company can do in the middle of their rapid growth where every mistake can disrupt the entire business process.
A question lingers… Should you outsource payroll services or have an internal (in-house) payroll department for this intricate job? To answer this simple question, there are a lot of aspects that matter. Below are some differences between outsourcing payroll services and internal payroll.
#1. Time Spent on Outsourced vs. Internal Payroll
Most of small to medium business owners manage payroll under their roof with a consideration that their payroll is not as intricate as that of big business with hundreds to thousands of employees’ salaries to handle. However, a comprehensive study in this subject shows that 60% of small business owners have their internal payroll department. Nearly 25% of the businesses with internal payroll spend over 6 hours per month on this function, equal to 72 hours per year. If this length of time is dedicated to more strategic functions of business, it surely will give a great boost to the company’s growth.
#2. Money Spent on Outsourced vs. Internal Payroll
Payroll specialists work in average period of 72 hours per year. Only for these 72 hours, business owners must pay their salaries full time, which is not good for their financial health. Thus, outsourcing payroll services are better in math. By hiring payroll services, business owners can highly customize their payroll services and only pay for the length of time they need for their specific requirements.
#3. Compliance and Accuracy Performed by Outsourced vs. Internal Payroll
Payroll is prone to mistakes caused by human error. The ever-changing, complicated tax changes often become the trigger of these mistakes. However, this does not mean that a mistake can easily be tolerated. A survey by Inc. shows that 1 in 3 employers have been negatively affected for payroll error. Thus, it would be more secure to your financial health if you leave the payroll to outsourced payroll specialists. With their expertise and experience, they are less likely to make mistakes on payroll. Even when mistakes occur, business owners have a capability for seeking financial or legal restitution. This usually depends on the details of the payroll service contract.
#4. Peace of Mind Created by Outsourced Payroll
Above all, payroll processing services give peace of mind. Business owners can concentrate more on strategic functions such as marketing and promotion by outsourcing payroll services. Investing time in such functions is likely to give direct, positive impacts on their business. This will help their business have a better position in the business competition.
Those are four key benefits of outsourcing payroll services that are worth considering. It costs a bit of money but carries out an abundance of benefits to business.