Outsourcing Payroll to Third-Party Company’s the Pros and Cons

Before investing time and effort it is essential to fully understand the pros and cons of payroll outsourcing services:

What are the pros?

1. Saving time

“26% of small businesses take three to five hours per month processing payroll manually” states Technology Advice. This is a considerable chunk of time taken out of your day, hence passing over the responsibility to a payroll provider can prove to save time.

2. Return on investment

“A payroll and HR solution saves an organization an average of $97, 180 per year” claim Greenhouse statistic. A payroll solution significantly decreases the time you spend each month manually processing payroll, hence allowing you to turn your attention to other aspects of the business.

3. Guaranteed compliance

“36 hours per week were spent by the HR and payroll departments on compliance-related activities”, according to Businesswire. Time is precious and it is important in maximising the efficiency of your business. Hence outsourcing payroll can significantly help to reduce the time spent on compliance.

4. Knowledge and expertise

Payroll outsourcers have experience in: paying employees, taxes and government compliance, hence you should be confident that you are in safe hands before going ahead.

5. Cost

Carrying out payroll whilst running a small business can prove to be time-consuming as there are additional costs such as: covering the cost for equipment, arranging contracts and training internal staff. Having an outsourcer on board can be more cost-effective and reduce this overall cost as the responsibility of doing the payroll is handed over to the provider.

What are the cons?

1. Response is delayed

Implementing a new system can take time and requires each member of your team to be open to change and adapt to the new system being implemented. The payroll provider may not respond to your request immediately and this may have repercussions in the long run.

2. Additional expenses

Many payroll providers can provide additional services such as integrations at an additional cost.

3. The organisation is ultimately accountable

If the payroll provider fails to pay the tax of business, the organisation still holds responsible for those unpaid taxes which can expose your company to a risk of being charged penalties or fines.

4. Breaches in security and data privacy

Sending personalised business data off-site is becoming a major concern as you are placing your trust fully into a third party, hence there is a risk of a privacy breach which you should be aware of.

Tax Navigator is renowned for their outstanding payroll services offered for small businesses in London and across the UK. The payroll outsourcing services, including, payroll accounting and outsourced bookkeeping to name a few are tailored to the needs of small businesses.