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14 Ways that Payroll Outsourcing Can Help Your Business

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As a business owner, you are always looking for ways to streamline operations, increase efficiency and reduce costs. One way to do this is by outsourcing your company’s payroll functions.

How? Payroll outsourcing involves working with a payroll provider to help handle payroll processing, tax filing and remitting payroll taxes, among other payroll-related tasks. In this article, we'll discuss 14 payroll outsourcing benefits and how it helps your business in the long run.

Finding the Right Solution

For larger companies with a fully staffed HR department, managing payroll in house might be the logical choice. At small businesses, however, managers can find themselves stretched thin by the responsibilities of managing payroll. It's a thankless job with many details to attend to and countless rules to follow. Meanwhile, tax authorities are always looking over your shoulder. Here's a look at the things that send business owners racing to their computers to Google: "payroll outsourcing providers."

Cost reduction

Outsourcing payroll duties can help reduce costs for small businesses. When you outsource payroll, you minimize the need to hire additional staff or payroll managers that you’d need if you’re managing payroll in-house. This can cut costs on salaries, benefits, and training.

Time is money

In addition to its complexities, processing payroll is time-consuming. Outsourcing your payroll service can free up time so you can focus on your core business activities. This can help increase productivity and reduce stress, all while giving back valuable time to your staff to focus on things like HR services or other business needs.

Direct deposit and pay cards

Another benefit is the ease of offering direct deposit or pay cards to employees. Direct deposits and pay cards can save time and money by eliminating the need for paper paychecks and reducing the risk of errors associated with manual processing. Employees enjoy the convenience of having pay automatically deposited into their bank accounts, or having funds available on a pay card which can improve employee satisfaction and retention.

Employee self-service

Outsourced payroll services can enable employee self-service, meaning that employees can access their payroll information—such as pay stubs and W-2s—online. This saves time and reduces the workload for your HR team.


The rules involving payroll taxes are complicated. Payroll processing involves compliance with a range of federal, state, local and industry laws. Using payroll outsourcing services can help your business comply with regulations and requirements governing pay and payroll taxes.

Benefits administration

Benefits administration alone can be both a time-consuming and difficult task, but the process can be simplified by allowing your payroll service provider to help manage benefits administration. This can include tasks such as processing open enrollments and terminations of benefits, managing COBRA administration, tracking employee deductions, and handling employee inquiries.

Enhanced security

Payroll data is sensitive and needs to be protected from unauthorized access. Outsourcing payroll services can provide enhanced security measures, like data encryption to help protect your payroll data from theft or fraud, and also ensure that your employee data stays secure.

Access to expertise

Payroll outsourcing providers give your business direct access to payroll experts who have experience in handling payroll processing for various industries. This can help you with costly mistakes and help ensures that your business is in compliance.

Access to latest technology

Payroll software is constantly evolving. A payroll service provider can give you access to the latest technology without you having to invest in expensive software and upgrades.

Reduce errors

Payroll errors can be costly and time-consuming to correct. Payroll outsourcing companies can help reduce errors by using automated payroll processing as well as checks and balances. The reduction in errors goes hand in hand with time savings—which will only save your business money in the end.

Integrate data

Outsourcing payroll can help you integrate your payroll data with other systems, such as your accounting software or time and labor management system. This can streamline your processes and help reduce the risk of errors.

Receive understandable and actionable data analysis

Your payroll functions generate a great deal of useful payroll data, but do you know how to take advantage of it? Payroll providers are well equipped to gather and analyze actionable data. Often, they can share easy-to-understand reports with you based on your payroll data, which can help you make more informed decisions about your payroll and other business operations.

Reduce stress

Payroll processing can be stressful, especially for small business owners who have limited resources. Outsourcing payroll services can help reduce stress by giving you more time to focus on other things.

Prioritizing your core business

By working with a payroll provider, you can use that time gained back to prioritize core business activities, such as marketing, sales and customer service. This extra time and attention can help you focus on growing your business and, as a result, increase your profits.

Is Payroll Outsourcing Right for You?

Outsourcing payroll services can offer many benefits for small businesses. With the right payroll provider, you can streamline your payroll process, reduce stress, and prioritize your core business.

When choosing a payroll outsourcing provider, it is important to select one that meets your specific business needs. Carefully consider factors such as experience in your industry and a proven track record of accuracy, compliance and security. You’ll benefit most from a provider that specializes in your desired services, is cost-effective for your business and allows for customization.

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