Outsourced Payroll Processing vs. Payroll Software: Which Is the Better Option for Businesses?

Payroll processing is a tedious and time-intensive task with no margin for error and needs to be compliant with all the rules and regulations. It can be done either in-house using a payroll software or by outsourcing the entire process. Let us see which is better out of the two options.

Productivity

Keeping the payroll process in-house keeps you busy keeping track of many things like benefit deductions, depositing the taxes as per the latest government requirements, keeping an account of new hires and terminations etc. Payroll processing eats a lot of time and energy of the employers. It is better to outsource it to free up your precious time and utilize it on core business areas, which helps in increasing the top and bottom lines.

Cost-Effectiveness

Having the payroll process in-house might require the hiring of experienced people to carry out the activities. This added cost can take a toll on the financial health of companies, especially the small and medium enterprises. The outsourced solutions, on the other hand, charge a fixed amount, which is very reasonable. Few of the companies also give the option of ‘pay per use’. Both these options come out to be much more economical than keeping the payroll process in-house.

Security

Payroll processing is not simple and involves many potential risks. This includes risks of identity theft, tampering with the company files, embezzlement of funds, leaking the salaries of the employees, confidentiality issues etc. Barring the larger organizations, no one else would have the bandwidth to keep a tab on fraudulent and unethical activities on a regular basis. The same process when outsourced offers enhanced security because the payroll services have the technologies employed in place to spot any payroll fraud quickly and alert the client regarding it. Also, the data is stored on different server locations reducing the chances of any leakage to the minimum.

Professional Expertise

The rules and regulations keep changing. The in-house staff or the owner wouldn’t have the time to keep themselves updated on the same. The payroll companies, on the other hand, have all the required time, manpower and technology available to them to be cognizant of any change. Outsourcing the payroll process thus helps in getting the professional expertise and benefit out of it.

Due to the numerous benefits associated with outsourcing, most of the companies prefer to outsource their payroll processing.