Should I Outsource Payroll or Operate In-House?

Two of the most important objectives for any business are effectivity and efficiency. Though the terms are similar, they refer to two distinct concepts:

Effectivity is defined as high-quality production. It means doing the job right.

Efficiency, on the other hand, refers to bang-per-buck. It means reducing the amount of time, money, and effort necessary to complete tasks.

 What does all of this have to do with Payroll?

Let’s take a look at the numbers:

• Nearly one in four business owners who conducts payroll internally reports devoting more than 6 hours per month to payroll. This adds up to almost two full work weeks per year—a substantial amount of time, especially for a small business owner who should be focusing on running and growing the business.

 

• Outsourcing payroll actually reduces overall cost when you factor in the hours spent running payroll in-house. According to PricewaterhouseCoopers, companies that outsource spend an average of 18% less than their counterparts who operate in-house payroll.

 

• IRS fines for payroll errors are astronomical. Annually, the IRS collects well over 4 billion dollars in payroll fines.

 

• What’s more, payroll-related tax errors are alarmingly common. Each year, one in three small businesses gets fined, and the average fine is over one thousand dollars.

It’s easy to see that outsourcing payroll can increase both effectivity and efficiency. As an added bonus, outsourcing your payroll also makes it easier and more cost-effective to outsource other important functions. For example, the majority of payroll management companies also offer employee self-service systems, human resource support, worker’s comp. payment, timekeeping services, background checks, and more.

Precise Payroll has over 30 years combined experience in the Payroll Industry—and we’re committed to making payroll an easy and enjoyable process in order to help small business owners focus on doing what they do best—building their companies and creating jobs.