In-House vs. Outsourcing Payroll: Which Is Better?

The IRS plans on doing more small business audits than ever before in the upcoming years. If you run a business you need to make sure that your payroll is done the right way to avoid any problems.

One of the choices you will have to make is whether to keep your payroll services in house vs outsourcing them. Both having in house services and outsourcing services have their advantages and disadvantages.

Deciding which is better for your small business means taking a careful look at your business situation. Read on to find out which payroll option is best.

In House vs Outsourcing Payroll Services

Having your payroll services in house means that you have dedicated employees with positions within your company that are in charge of payroll operations. 

Outsourcing payroll services means that you hire an outside firm to handle all of your business’s payroll needs. This can either be on a contractual basis or as something more steady.

Pros and Cons of in House Payroll 

Creating an in house payroll department is an excellent business strategy providing that your business operation meets some critical criteria.

First of all, you need to be a large enough operation to make hiring employees dedicated to your payroll needs make sense.

Payroll isn’t the most time-consuming of jobs so unless you have a large number of employees it doesn’t make sense to have dedicated payroll people.

If you are a larger operation, having a dedicated payroll department makes a lot of sense. It increases accountability and allows you to have all of your records in one place.

It also decreases the risk of a third-party data or security breach when it comes to your employee’s personal information.

When everything is in house you have nobody outside of your corporation to blame if something goes wrong.

Pros and Cons of Outsourcing Payroll Services

Outsourcing payroll services may be cheaper if you run a small business. Hiring employees in house will be more expensive because you need to pay their wages and benefits. 

If they do not have enough payroll tasks for them to complete it doesn’t make sense to hire full-time employees. In this case, you should outsource your payroll.

Not only will you save money on wages and benefits, but you will also get the expertise that only an outside payroll specialist can provide. You can factor in outsourcing payroll as part of your business plan expenses.

Knowing Which to Choose

Knowing whether to outsource your payroll vs keep it in house depends a lot on the size of your business. If you are still having trouble deciding which to choose, check out the cost to outsource payroll on this estimator.

Make the Choice

Choosing between in house vs outsourcing payroll options is specific to each business. Examine your business strategy, the size of your company, and the types of employees you have to determine the appropriate action.

Make the right choice for your payroll options today based on the information in this guide. If you found this content informative, check out the rest of our blog for other articles of an equal caliber.