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Benefits of Outsourcing Your Payroll Function


Over the years, top business consultants have always liked outsourcing non-core services like IT and payroll processing. 

And although you may prefer managing your payroll accounting internally through payroll software or manual bookkeeping, most companies would rather outsource this service to payroll experts.

Known business consultants have long favored outsourcing non-core functions like payroll processing.

Doing this not only enables your company to leverage the professional expertise of an organization like, but it also frees you to focus on your core business functions. In this article, we will be looking at some of the main benefits of outsourcing your payroll function. 

Saves Time

Internally handling your payroll function is not a walk in the park. There are several minute and intricate details like garnishments, employee hires and terminations, as well as benefits deductions. Also, the department has to be up to date with any state or federal regulation changes. 

Internal management of payroll is a complicated task, which is why each year companies that have chosen this route realize that they have to set aside precious company time to prepare W2s. letting a professional firm like handle your payroll accounting will unburden you from fretting about these issues. Also, it lessens the burden of your HR function that enables them to focus on strategically more critical functions to your business. 

One of the reasons most established organizations choose outsourcing payroll accounting is strategic resource management. This also gives them a competitive advantage over their competitors. 

Cost Reduction

Another glaring advantage of outsourcing the payroll function is that it saves you money. Cost-saving benefits are especially apparent to medium-sized or small businesses. Unlike established businesses, a small enterprise cannot sustain an internal payroll department. That is why it is in your best interest to outsource the payroll function to a reputed and professional payroll service provider like 

If you compare the expenses involved in handling your payroll function internally and outsourcing it to an expert, you will come to the realization that you can save a good amount of dollars. 

Managing your payroll function internally involves a lot of activities that may be time-consuming. Some of them include signing paychecks, payroll calculation, computation of taxes and returns, preparing W2s, and ensuring that you report terminations and new hires. 

These activities require time, and for a small startup, you will realize that it’s more expensive for you. It explains why most small and medium-sized enterprises make smart decisions like outsourcing the payroll function to a specialist firm. 

Increased Security

Payroll processing involves some risks that make it demand lots of monitoring. One risk is the theft of information, and this can cost your company a fortune. And while your employees may be trustworthy, the payroll function requires extensive security and monitoring. 

You need to put in place appropriate security measures to prevent the abstraction of funds and tampering with business information. Otherwise, your enterprise may incur unfathomable losses. Payroll companies are required to put in place these measures. A good company like has state-of-the-art technology that enables them to notice payroll fraud timely and nip it in the bud. 

Additionally, they have robust data storage and protection policies, a backup facility, as well as multiple server locations that prevent any potential payroll fraud.

Top payroll companies usually invest a lot of resources to prevent instances of fraud. As a start-up business, you cannot have this level of security in-house. You will mostly rely on manual bookkeeping, which, unfortunately, cannot ward off fraudulent activities the way modern technologies can. This is why outsourcing your payroll function to a third-party vendor is always the smarter choice. 

Access to Professional Team of Experts

When you outsource your payroll function, you enjoy the services of a professional team of accountants that have great knowledge about government regulations. Top payroll service providers boast experienced experts that handle all the intricacies of a payroll system. 

Additionally, workers' compensation, human resource, and addressing employee concerns are handled well by the payroll provider. 

 When choosing a payroll provider to work with, one thing you should see if they have is a 401k plan. Payroll transactions are an intricate matter and getting a company that offers this plan will be hugely advantageous to you. 

No Maintenance or Infrastructure Costs

If you choose the way of an in-house payroll system, you will have to invest in expensive software and also pay the costs of upgrading it. And because of the need to always have up-to-date tax tables on your systems, it is an additional activity that consumes time and money. But if you outsource your payroll function, you won’t have to be concerned with these infrastructure and maintenance costs. 

Another thing is that a good payroll management company will avoid incorrect filings that can lead to costly penalties. 

Direct Bank Deposit

Staff at small and medium-sized businesses prefers direct bank deposits when it comes to processing their salaries. However, this is not a luxury that startup companies can afford.

Not only do they have to create paper checks each month, but they also have lots of paperwork to manage to ensure the records of these rolled out checks are maintained. Outsourcing your payroll function also reduces instances of fraud. Moreover, it is less time-consuming and not as error-prone as manual bookkeeping. 

No-Risk of an In-House Payroll Employee Quitting

One of the benefits of outsourcing your payroll function is that it enables your enterprise to streamline the payroll process without complication. Another thing is that, when an employee is overworked due to multi-tasking, they may quit their job leaving you stranded. 

There is always a big risk for small enterprises that rely on an employee managing several responsibilities. Outsourcing your payroll accounting to a specialist company protects you from this stress. Additionally, the output you get in terms of accuracy and quality always justifies the investment in a top payroll service provider. 


Like all other non-core functions, it makes sense to outsource your payroll accounting. These companies have the latest technologies to ensure the security and integrity of your employee information. Also, a company like will handle your payroll accounting and leave you free to focus on the core functions of your business. 

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