Payroll Outsourcing: Pros, Cons, & Risks vs In-House Payroll

The costs of payroll outsourcing vary dramatically, depending on the provider you select. For example, you can get payroll assistance without spending a dime through Payroll4Free. On the opposite end of the spectrum, QuickBooks Payroll can run up to $100 per month.

  • Generally, if you choose a paid solution, you can expect to pay between $30 to $80, on average.
  • Reputable payroll outsourcing providers are committed to protecting sensitive data and should publicly share how they do so.
  • You can also look for a certified BACs Bureau for assurance that your payroll provider is suitably accredited.
  • As the competition in the accounting industry grows, payroll services outsourcing has emerged as a p…
  • It specializes in core HR functions, including payroll, benefits, time tracking and scheduling.

Blueprint is an independent, advertising-supported comparison service focused on helping readers make smarter decisions. We receive compensation from the companies that advertise on Blueprint which may impact how and where products appear on this site. The compensation we receive from advertisers does not influence the recommendations or advice our editorial imprest account team provides in our articles or otherwise impact any of the editorial content on Blueprint. Blueprint does not include all companies, products or offers that may be available to you within the market. The term “payroll” can describe both a company’s list of employees to be paid and also the total amount an employer owes in wages and salaries.

Payroll Outsourcing: Pros, Cons, & Risks (vs In-House Payroll)

Payroll outsourcing may be done by a company specializing in that task, generally known as a payroll outsourcing provider or a payroll service bureau. It is also commonly done by accountancy firms and Professional Employer Organizations (PEOs) (read more about the latter in our guide How does a PEO work?). An accountancy firm with local offices may provide the greatest level of service for a company based in one jurisdiction. For others, a payroll outsourcing provider may be more attractive because they are often able to service employees in many states and countries, and may offer additional options such as full HR outsourcing.

Basic payroll outsourcing features range from simply processing payroll, including by direct deposits or printing checks, to more complicated tasks such as tax compliance and filing. Payroll outsourcing certainly has advantages, but no single resource has the ability to point a company toward guaranteed success with payroll management. Company leaders should not take a decision about outsourcing payroll lightly but should understand its convenience and financial savings. A solid understanding of payroll outsourcing’s pros and cons, along with accurate information on existing payroll management costs, can offer helpful guidance. Before you decide to go for payroll outsourcing services and begin looking for a service provider, understand your client’s payroll requirements thoroughly.

Plus, our fast direct deposit system will help ensure your employees are happy with the change. Save 100’s on your yearly accounting by comparing quotes from local companies. If changes need to be made retrospectively to your payroll, such as a sick day taken on the last day of the month, this can be adjusted for in the following month. To learn more about the free trial or explore our services in further detail, please get in touch with us and one of our team members will be happy to call you back. It may not always be easy to determine whether to outsource your payroll needs. This is appropriate for simple payroll with the same salary details/amount every month.

Services of accounting support for PE taking into account the specifics of IT companies. Development and implementation of an effective system of labour protection and fire safety, customized for your business by skilled professionals of Smart Solutions. UKG Pro is renowned for its extensive HR functionalities and customization capabilities. Its strong focus on employee insights and analytics makes it a powerful tool for strategic HR management. The opinions, analyses, reviews or recommendations expressed in this article are those of the Blueprint editorial staff alone. The information is accurate as of the publish date, but always check the provider’s website for the most current information.

Does Outsourcing HR Save Money?

By outsourcing these tasks, you can focus on growing your business and serving your customers. Payroll companies will have access to the best payroll software available. It’s important for small companies to have the updated version of the payroll software and the most recent tax tables. When you are outsourcing the payroll as the owner, you don’t have to think about these issues, because it will all be handled by the payroll experts. If you have a small administrative department and are looking to make payroll and other HR tasks simpler for them, you may want a provider that has a powerful, easy to use and integrate software platform. A Human Resources Information System (HRIS) may be a good option if your staff are already somewhat familiar with payroll and deductions.

Outsourcing Payroll Duties

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Drawbacks of Outsourcing HR

Economic theories of the day advocated growth in all reasonable directions to exploit economies of scale. This mindset of vertical integration extended into companies’ internal processes as well. It wasn’t until the late 1980s that many companies, hindered by bloated internal structures, began to see broad strategic value in “hiring away” work once completed in-house. Once the possible cost savings of the practice became clearer, there was no turning back.


When information is held off-site, as in the case of payroll outsourcing, there is increased exposure to the risk of a data breach. If a payroll outsourcing provider is hacked, the client may not even be aware that their employee data has been stolen. Keep in mind, outsourcing your company’s payroll function doesn’t absolve your firm from its legal responsibilities.

Chances are, that’s a fraction of the cost of the time you might spend on payroll if you’re doing it yourself. Finding a high-quality outsourcing solution can make payroll management simpler and decrease the chance of mistakes. When businesses consider payroll outsourcing, identify theft is one of the biggest considerations. In house, staff are more likely to steal funds from the company or destroy business documents for their own personal interest even if we are talking about the most trustworthy employee.