What are the Benefits of Outsourcing Corporate Payroll Services?

Managing payroll in-house is often a time-consuming and expensive part of doing business for small and medium enterprises.

As a small and medium business owner, you have probably weighed the pros and cons of in-house payroll versus outsourcing corporate payroll services.

At the most basic level, your payroll process must meet the following.

  • Setting up a system to collect hours worked.
  • Calculating the appropriate payment amount after withholding and taxes.
  • Managing direct deposit or mailing checks.
  • Maintaining payroll records.
  • Submitting necessary tax forms and information to the IRS and state tax offices.
  • Managing unemployment reporting and taxation.
  • Handling withholding payments to retirement plans and other entities.
  • Providing W-2 forms and other annual tax documents to employees.

Payroll clerks fulfill many functions for in-house payroll services within this bare-bones approach to payroll management. The payroll clerk is usually a human resources or finance department member, with low direct costs for this entry-level position. However, if your small or medium-sized business is comparing the costs of in-house and outsourced payroll, making a comparison using direct costs is misleading. Processing payroll is just one component of your company’s payroll management process, and you will also need to consider many other indirect costs.

Payroll management is a complex part of any business that requires expertise and training, and it is more than just recording hours worked and issuing payments. Laws and regulations change often, and your business must remain in compliance. According to a study by ADP, one-third of midsized companies incurred penalties for noncompliance, and companies processing payroll in-house were three times more likely to incur penalties.


Top Reasons to Outsource Your Corporate Payroll Services

  • Tax laws and labor regulations are complex and change regularly. Businesses must comply with state, federal, and local regulations. When you process payroll in-house, you either must invest resources to keep payroll staff up to date or run the risk of costly errors. When you outsource, you have confidence that your business’s payroll complies with all regulations, including taxes, ADA, hiring paperwork including I-9 documentation, termination, and protected leaves.
  • The skill set and expertise to stay abreast of these regulations are often higher than that of the staff required to process payroll. When you process payroll in-house, you either risk not staying abreast or allocating time from higher-level managers and executives.
  • Outsourcing payroll may save your company money. Research shows that in-house teams cost small and medium businesses twenty percent more than the costs of outsourcing payroll.
  • Outsourcing payments reduces or eliminates many indirect costs relating to overheads such as office space, software, equipment, and consults and training.
  • When you outsource payroll, you implement streamlined payroll management workflows and use accessible and secure software and apps. These LEAN workflows impact every employee, freeing up time for revenue-generating tasks.
  • Payroll providers utilize state-of-the-art Human Resources Information Systems (HRIS). When you outsource, you upgrade your HSIS systems.
  • Employee payroll data is sensitive and a target for cybercriminals. Breaches are damaging to the employees and your business. When you outsource payroll, you mitigate the risks of data breaches by implementing secure HRIS systems.
  • When outsourcing payroll, you have a team available when your employees have questions. You also gain business continuity for one of your company’s most essential functions.
  • Employees tend to be highly satisfied with outsourced payroll. HSIS systems increase self-service capabilities, including benefits management, and allow remote and hybrid employees to securely and efficiently report hours from wherever they work. That is essential –  74% of companies plan on making hybrid work permanent.
  • Advanced HR compensation and payroll reporting are usually built right in, supplying metrics to executives and managers to support budgeting and planning for growth and innovation.
  • Businesses that outsource payroll gain agility and scalability. Payroll management can respond to growth and seasonal workforce changes. You have the resources you need when you need them.

Outsourcing payroll is a game changer for many small and medium-sized businesses. With time to allocate to growth and innovation, streamlined processes, risk reduction, and cost savings, outsourcing payroll can drive your business towards your aspirations.


Contact Us Today

TANDIUM Corporation provides a full range of Human Resources Services to small and medium-sized businesses, including payroll services. TANDIUM Corporation specializes in serving the Human Resources, Payroll, and Benefits needs of businesses and non-profit organizations. Our team of experienced Human Resources Specialists can help determine if outsourcing payroll is right for your business. Contact us today to schedule a free initial consultation.