Payroll Services

By Jodee Redmond

Does outsourcing payroll make sense for your company? As your business grows, you may find that handling this function in-house is too big a headache. Trying to keep abreast of changes to federal and state laws as they apply to multiple employees while ensuring that filings are made correctly is a lot of pressure, especially on top of the day-to-day work of keeping the business running.

Turning payroll over to a company that specializes in it makes sense, as it frees up time to devote to other activities.

Pros and Cons of Working with Outsourced Payroll

The main positive aspects of payroll outsourcing are:

• Saving time. You'll have more time for your own business instead of dealing with time-consuming but essential aspects of the business.


• Saving money. You may find that the time you spend on doing payroll yourself is time you could have spent working; you may also find that it's far more cost-efficient to outsource your payroll depending on your staff size than it is to hire an accountant or delegate the work to other staff.


• Peace of mind. Apart from a basic understanding of how the process and the relevant laws work, you don't have to worry about the technical aspects of payroll processing; if you outsource the task, much of it becomes automated and all deadlines are met automatically by a computerized system, complying with both state and federal reporting legislation.

The main negative points are:

• Security concerns. If you have sensitive data, you are going to have to make sure you go with a company that has a good history of security integrity and even so, you will need to make a risk assessment and possibly see an increase in insurance costs.


• Unique situations. If you are dealing with these in-house, they are easy to fix yourself. But if some unique issue arises, you will have to have specialized support from your payroll processing company, increasing the amount of time spent on the problem


• Costs. The basic packages offered by outsourcing may be cheap, but if you need extra options and specialized functions they can end up costing you a lot; always be sure to research all the costs associated before you go into any contracts.

Comparing Payroll Service Companies

Here are some points to consider:

• How long has the company been in business? (Check with Better Business Bureau for information.)
• What type of business does it usually work with?
• What hours are customer-service representatives available?
• Will you be assigned a dedicated payroll specialist?
• How often are reports generated? What data do they contain?

Cost of Outsourcing Payroll Processing for Business

Payroll companies may offer a package deal for services that includes processing the payroll, online access for employees, tax filing, and direct deposit for anywhere from $25-$200 per month. Online payroll processing services usually charge a certain base rate, regardless of whether you pay your employees weekly, biweekly, semi-monthly or monthly. This rate can vary from $25-$160 per month.