Payroll Outsourcing: Pros and Cons

Xero Bookkeeping
December 2, 2019
Reasons Why You Should Outsource Accounting Services
December 5, 2019

Payroll Outsourcing: Pros and Cons

Payroll is a relatively specialist part of running a business. There is plenty of legislation and governance, and making mistakes can be costly for a company. However, an in-house payroll service may not be something you can afford, so should you be considering outsourcing your payroll? Here are some of the pros and cons to help you decide.


The Pros



It is essential to ensure you are not involved in notifications or penalties and staying up-to-date with changes to rules and regulations which can be a nightmare if you don’t know what you’re doing. Outsourcing to bookkeeping services or payroll services means it is their responsibility to be compliant.


Saving Money:

Having payroll in-house requires a qualified payroll expert which can be costly and potentially lead to retraining. Outsourcing saves money because it is down to the company you hire to ensure staff are available for you.


SLAs and Deadlines:

There are various deadlines and SLAs involved in payroll, and by outsourcing, you have expert teams who are trained to avoid missing any deadlines.


Expert Source of Information:

As well as controlling your payroll requirements your outsourcing team will be up-to-date with any tax regulation changes and are best placed to offer advice should you come across any situations regarding payroll and your employees.


An External Department:

Many outsourcing solutions for payroll will be with companies that also offer other specialist skills such as Human Resources which is again another area that you do not want to get wrong. Finding a company that can take on all of the tasks in these areas offers you a one-stop external department the might not be part of your company but collates all of your issues into one contact point.


Best for Small Companies:

It boils down to working with your skills and not wasting time trying to be master of everything. Focusing on running the business and doing what you do best is the better use of your time and resources. Outsourcing payroll services makes a massive amount of sense.


The Cons


Security of data:

with any outsourcing, there is a potential concern that you are sharing confidential information, and this potentially can be mishandled. However, it is down to you to ensure that you get signed agreements and implement consequences should data sent to an outsourcing company not be handled correctly. You should ensure that any company is GDPR compliant before handing any work to them.


Making last-minute amendments:

There are more deadlines involved in outsourcing payroll than having someone sitting at a desk in your office. Your outsourcing team will need a cut-off date to enable them to prepare, and this means that last-minute changes could be more tricky and need to carry forward to the next pay period which may be inconvenient for your staff. Of course, excellent communication with your team can ensure that this is transparent and is known about in advance.


If you are a small business that do no wish to handle payroll internally, we can at MJ Accounting help you with this task, saving you money and time, and allowing you to focus instead on managing your business in the best way possible.  Contact us for more details.

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