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Should You Outsource Your Payroll Processing?

October 4, 2025 Kevin Kenealy Outsourcing Payroll, Outsourcing Payroll Processing Comments Off on Should You Outsource Your Payroll Processing? ,
Should You Outsource Your Payroll Processing?

Companies have obligations and must file things to employees. Payroll issues are complex for today’s high-tech business world. A company’s payroll department has many moving parts of employees’ pay. This includes the payroll processing, direct deposits into employees’ bank accounts, FICA, FICO, State Income tax payments to government agencies including the State and the Federal Government, reporting requirements, time and attendance tracking, company payroll management reports, worker’s compensation, 401k’s as well as other retirement account reporting, unemployment claims, vacation time-off and more. This is an enormous amount of detail to keep track of for a small company while also running a business. The more time a business owner spends on these items the less time is spent on building and managing the current business.

How Much Time Should be Spent on Payroll?

The logical answer to this question is for the business owner to calculate the time spent working on payroll each week, every other week or month and then multiply it out for 52 weeks, 26 weeks or 12 months. When all the totals for each time segment are calculated, then the business owner has to look at the actual cost of working on payroll by comparing the time value to the amount of business not generated related to working on payroll and not managing and building the business. To make the comparison and analysis work and be valid each payroll task must be included in the evaluation, managing tax reporting, employee benefits, retirement funds to name just a few. Over the years, several studies in actual numbers have shown that business owners spend 3 full weeks each year dealing with federal tax issues. Add all the hours working on all the other payroll issues and tasks and it becomes glaringly clear that managing payroll is very expensive both in terms of time and in business growth perspective. There’s no magic number or empirical study out there that says when a business owner needs to hire a payroll processing company, rather than do it themselves. However, it’s simple to evaluate if an owner is spending 10 – 20 % of their time working on payroll and all its related issues it’s likely time to consider a payroll processing company to save time and money and then to put those savings back into managing and building business.

Answer the following questions to help determine if it’s time to hire an outside payroll processing company:

  • Is the time you spend on payroll is more than you like?
  • Is your business expanding, hiring more employees and now is payroll becoming a much larger task than before?
  • Are payroll mistakes becoming more expensive due to tax penalties for filing errors levied by the IRS?
  • Is payroll taking so much of your time that the necessary time needed to manage and grow your business is being sacrificed.

From a common sense point of view, if the answer to this group of questions is yes, it makes good financial sense to outsource payroll processing. The monthly expense of payroll processing fees, while not insignificant, is doable for most businesses. The advantage of outsourcing payroll processing is the time savings, cost savings realized with the reduction of penalties and fines and the better focus of time on and energy towards building and growing your business.


Why Your Company Needs to Outsource Its Payroll

February 8, 2023 Kevin Kenealy outsource payroll Comments Off on Why Your Company Needs to Outsource Its Payroll ,
The Top Ten Payroll Problems Businesses Face Today in 2023 by The Payroll Company

Outsourcing payroll can provide numerous benefits to companies of all sizes. By outsourcing payroll, companies can save time, reduce costs, and improve efficiency, while also reducing the risk of compliance issues and errors. In this essay, we will discuss the key reasons why companies should consider outsourcing payroll.

One of the most significant benefits of outsourcing payroll is the time savings it can provide. Payroll can be a time-consuming process, and it requires a significant investment of time and resources to manage in-house. Outsourcing payroll can free up time and resources that can be better used elsewhere in the business, allowing companies to focus on their core competencies and goals.

Another key reason to outsource payroll is cost savings. Payroll is a complex and ever-changing process, and it can be expensive to maintain the necessary systems, software, and personnel to manage it in-house. Outsourcing payroll to a professional payroll service provider can reduce the costs associated with payroll management, including the cost of software, hardware, and personnel.

Outsourcing payroll can also improve efficiency and accuracy. Payroll providers have the expertise, experience, and technology to manage payroll efficiently and accurately, reducing the risk of errors and compliance issues. This helps ensure that employees are paid correctly and on time, and it reduces the risk of penalties and fines for compliance violations.

Another benefit of outsourcing payroll is the ability to stay up-to-date with changing regulations. Payroll is subject to numerous regulations, and it can be difficult for companies to stay up-to-date with all of the changes. Payroll service providers have the expertise and resources to stay current with changing regulations and ensure that companies are complying.

Outsourcing payroll also provides companies with access to more comprehensive payroll services and support. Payroll providers offer a wide range of services, including direct deposit, tax filing, and benefits administration, that companies may not be able to provide in-house. These services can help companies provide a better overall payroll experience for their employees.

Finally, outsourcing payroll can also provide peace of mind. When payroll is managed in-house, there is always the risk of errors and compliance issues, which can result in penalties and fines. Outsourcing payroll to a professional service provider eliminates these risks, providing companies with peace of mind and reducing the stress associated with payroll management.

In conclusion, outsourcing payroll can provide numerous benefits to companies of all sizes. From time and cost savings to improved efficiency and accuracy, to staying up-to-date with changing regulations and providing comprehensive payroll services, outsourcing payroll can help companies streamline their payroll processes, reduce risks, and improve their overall payroll experience for employees.


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