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Why You Should Outsource Payroll

Payroll is a big job and it takes a lot of training to get it right. If you do it yourself, you have to be very careful because there are many things to consider when doing your calculations. You must ensure that you withhold the correct taxes from your employee’s paychecks, correctly calculate wages and bonuses, pay employees with the correct tax deductions, comply with wage and hour laws, and make sure that you pay employees on time. With all of this to keep track of, there’s plenty of room for accidental errors. Therefore, outsourcing payroll is the best option for most small businesses.

Should you Get an Accountant or Bookkeeper?

If your company has fewer than 20 employees, it probably doesn’t pay to hire someone to do in-house payroll.

By outsourcing payroll, you will almost definitely save money on bookkeeping fees, even if you were splitting the work with the bookkeeper in your own precious spare time.

Some Facts About Payroll

  • According to the IRS, 40% of small businesses pay an average penalty of $845 per year for late or incorrect filings. Most payroll companies guarantee their work so that you won’t incur fees no matter what.
  • Payroll is more work for hourly employees with changing schedules than it is for salaried employees. This makes a big difference to you, but doesn’t matter to the payroll company.
  • Employees like direct deposit (which is difficult to set up if not through a payroll company). With direct deposit employees don’t have to come in to work on their day off or sick or vacation day to pick up their check, and they don’t have to wait for the check to clear.
  • Employees prefer bimonthly paychecks rather than getting paid once a month.
  • The payroll market is competitive and reflects local conditions. Some payroll companies have charges for extra features like W2s, frequent payroll, adjusting employee info, but many of them don’t so shop around and ask questions.
  • Some time tracking services, like Timesheets.com, can send timesheet info directly to many payroll companies in electronic form. This way you don’t have to call in the hours (the traditional method of conveying payroll data).

Outsourcing is a Good Investment

Outsourcing payroll makes your company more efficient and reduces payroll errors. If it seems like a feasible investment, you should also consider hiring a payroll expert to assist you with your needs. They will make sure that you stay compliant, will organize your tax returns, and will reduce payroll errors.


Need to track time and attendance for payroll and billing? Timesheets.com is an easy way to track employee and contractor time along with expense tracking and HR document storage options. Try it free today and see how easy exporting your payroll data can be!

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5 Comments

  1. Leviticus Bennett
    Leviticus Bennett March 8, 2017

    That’s crazy that so many small businesses pay penalties for late or incorrect payroll filings. That’s neat that outsourced services have guarantees that promise to avoid those penalties. My uncle is starting a business, but he’s terrible with HR stuff, so he might hire another company to handle that for him.

  2. Ian Horn
    Ian Horn March 21, 2017

    Well, outsourcing a payroll service enables a business owner to focus on the process and strategies that directly contributes something towards the growth of the business. Apart from the facts about payroll that are mentioned in the blog, here I want to deliver some other benefits of outsourcing payroll in a small business.
    1)Time saving: Outsourcing payroll immediately frees up precious time and employers only need to make contact with their representative once in each pay period.
    2)Money saved: Time is saved means money is ultimately saved. Outsourcing payroll helps in saving a lot of money in completing the whole task.
    3)Improved security: Online payroll provides redundant back up and multiple server locations which in tern enhances the security.
    So, to my view it is better to outsource payroll services for the business.

    • Peggy Emch
      Peggy Emch March 30, 2017

      Thanks for the additions!

  3. Patrick Jeffries
    Patrick Jeffries July 17, 2020

    Outsourcing payroll essentially means you hire a company that specializes in outsourced payroll services. They become helpful for your businesses.

  4. Clorinda Copeland
    Clorinda Copeland November 23, 2020

    A good post! thanks for sharing.

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