Every organization spends 40-60% of its revenue on employee salaries. If we were to calculate the expenses of the business, then payroll is definitely the biggest and the most important one. Without proper efficiency in this department, we end up further increasing the management budget of payroll. Therefore, when your payroll is time-consuming, costly, and simply hectic, you need to start thinking about payroll services for startups. As a growing organization, it is imperative to enhance the efficiency of your payroll department, including proper budget allocation, accurate calculations, etc. If you are unable to do that, then consider a payroll solution for small businesses. In this article, we have discussed some factors to help you decide when you need to outsource payroll services. Check out and move towards the right decision.

Some Signs That You Need to Outsource Payroll Service

For most businesses, the quickest analysis is to see if payroll is not feasible anymore. If you are at the tipping point, where payroll is a major roadblock, then it is time to change. Usually, this tipping point arrives when you are executing your growth plans or expansion strategy.

Here are the top signs that you need to outsource payroll service:

1. When You Hear Complains

When your payroll accuracy and timelines start differing, your payroll team might not tell you that, probably because they don’t see it themselves. The right person to listen to in this case is the employee. When paychecks are delayed or salary is being dispatched incorrectly, your employees will start raising their voices.

You need to listen to these complaints to make the right decision. If you fail to understand why your employees are unhappy with your payroll structure, you may fail to reduce employee turnover. This is extremely damaging for the health of the company during expansion.

Already during the expansion, you have an increased demand to structure and improve your payroll. You need to correctly calculate and dispatch compensation, bonuses, and reporting. Your payroll department should be able to meet these requirements without any glitches. If it is incapable of catering to your growth demands, then it may be time to outsource payroll service.

2. Your Budget is Out of Hand

For a small organization, payroll is an added expense. When you are growing, you need money to expand your operations and deliver better to clients. For instance, hiring new people for the organization requires money and so does taking a technology tool. If you are in your growth years and you are falling short of cash for growth activities, it may be time to mitigate payroll overheads and payroll services for startups can help.

The above costs are necessary for the growth of the organizations. There are other expenses that make payroll inefficient. For example, the cost of compliance issues or payroll penalties. One month, you missed checking the labour laws, so you didn’t implement changes. These mistakes actually cost you money.

To mitigate these errors and costs, you need to outsource payroll services. This will reduce the money spend on payroll. You may only need to pay for services you acquire and your budget will be freed for growth activities.

3. There’s No Time

Not having enough time causes a delay in every payroll task. Whether your staff is overworked or under-trained, if your payroll is getting delayed month after month, your employees are not going to like it. This is a key sign that you need to outsource payroll service.

Even after spending time on activities, your payroll activities are getting delayed. You are waiting for that report for a week and it is incomplete. Your employees are fighting for correct payroll dispatches but mistakes are still happening. If you can relate, then payroll solution for small businesses is the right route.

4. Lousy Software

You may get a signal here in two ways:

        • You don’t have software and your team is achieving payroll on pen and paper. It is troublesome and there are consistent errors and tax issues.
        • You have software but it is lousy and outdated. It doesn’t back up data regularly and there’s very little automation. You might as well use Excel.

In both cases, you need payroll service for startups to streamline payroll processes. An outsourced payroll service helps you with the latest and robust tech, which reduces your burden.

5. Too Much Overtime

The last clue is when your staff is overworked. If your HR team is spending more hours in the office than they should, then either their productivity is low or there’s just too much work. In both cases, the situation is irreparable. You can run into mistakes sooner than later. To avoid errors and improve the situation, you can outsource payroll services and free your HR employee for more strategic roles.

Advantages of Payroll Solution for a Small Business

While we have evaluated when it is time to outsource payroll service, why it is important? Are you trying to find value in payroll solutions for small businesses? Don’t worry! We have an answer. Read benefits of outsourcing payroll services.

1. Time-Effectiveness

Managing and preparing payroll is not an easy task. The HR team needs to spend multiple hours calculating payments and dispatching them. There’s an added burden of terminations, new hires, benefits, bonuses, appraisals, etc. Include in this the difficulty of keeping abreast with new labour and payroll laws and regulations.

Due to the above difficult factors, it is often a task to manage payroll in-house. When you use an outsourced payroll service, the provider will handle responsibilities that burden you, such as calculations. They achieve this task with complete precision which saves your time.

The HR department of your office is free to strategically nurture employees. They can focus on employee engagement and motivation and conduct training for employees whenever there’s a requirement.

With a streamlined HR department, businesses receive an edge over competitors. You are able to reduce turnover and improve retention, which also impacts your productivity. This ultimately makes you a better provider of services.

2. No Penalties

Every year, various small and medium organizations pay penalties for making mistakes in taxes, labor laws, and other regulations, such as the PPF fund. This is because these organizations don’t have the skills or the time to keep updated with regulations. Sometimes, organizations have interns or amateur employees working on payroll without any guidance, which leads to mistakes.

With the top payroll service, this is not the case. Your payroll service for startups takes care of the laws, regulations, and calculations. There are no mistakes and complete compliance, which relieves you from the burden of fines and penalties. This ends up saving your money.

3. Better Security

In a small organization, there’s no provision for data security. The payroll department holds important data of employees, which can be lost during a system crash or stolen when a computer is hacked. To ensure the safety of this data, you need extensive data monitoring and high-level security.

Fortunately, an outsourced payroll service can help you with security even when you don’t have the funds and the infrastructure to increase the security of the payroll department. From secure tech to encryption of data for transmission, your payroll solution for small businesses gives you optimum data security.

How Outsourced Payroll Service Can Save You Money?

Other than the advantages of outsourcing payroll service, you may want to know how it can save your money. The above benefits are great for the company but you have a budget too. Here’s how payroll services for startups are designed to help you cut costs and still accurately dispatch payroll.

1. Hiring Costs

One of the major costs of in-house payroll is the hiring cost. You need to hire, maintain, and pay this employee. With a payroll solution for small businesses, you don’t have to do all that. The provider will hire and pay HR employees, which saves you money.

2. Training Costs

If you hire employees, you have to eventually nurture and train them. When you outsource payroll services, you don’t need to train employees. You get a remote team, which works for your payroll requirements, so training costs are mitigated.

After outsourcing payroll service, you can easily see the impact on the organization. Your budget for payroll reduces drastically, which leads to an increase in your revenue.

What Questions You Need Ask Before Acquiring a Payroll Solution for Small Businesses?

From the above discussion, you may have already discovered that your organization needs outsourcing payroll services to survive and thrive. However, how can you know which payroll solution for small businesses is right for your organization?

Many companies ask these questions to reduce their choices and find the perfect payroll services for startups. We have discussed these 5 questions below, read on and check if you already have a lead that resolves your issues.

      • What process do you use to calculate payroll costs?
      • Do you have any indirect or hidden charges?
      • Do we get access to expert advice and consistent support?
      • Do you offer an employee self-service portal?
      • What is your security structure?


It is certain that you have already made up your mind to outsource payroll services. In the above discussion, we have checked the triggers that indicate there’s an issue in your payroll department. The solution to these triggers is a payroll solution for small businesses. It helps you reduce costs, improve time management, and enhance the productivity of payroll. You only have to look for top payroll services to receive discussed benefits. Paysquare is the best payroll service provider for startups. Over decades, we have gained the required experience to handle the expected and unexpected requirements of your payroll department. We have, in fact, created a skilled team to cater to your payroll needs. Visit our website and understand our services better. For further discussion, let’s get on a call!

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