Payroll is complicated and requires extreme concentration and accuracy. The employees put all their focus on payroll while deviating their efficiency from more important things that may increase the productivity of your business. By outsourcing the payroll function, your business can benefit in several ways. Having a dedicated external vendor to finish this job allows process specialization in your employees, who can then achieve the company goals in a more efficient way.


What are the Significant Impacts of Outsourcing the Payroll Function on an Organization?


1. Time Savings / Productivity

Managing payroll requires maintaining and calculating benefit deductions, new hires, and terminations, paid/unpaid leaves, overtime, rules and regulations of the specific region and more. Several labour hours are spent in calculating and sending out the salaries on time.

Since payroll is so important, it requires re-checking for errors, which is just a wastage of even more prestigious man-hours. This is especially for small and medium businesses that don’t have the luxury to waste so much time just taking care of payroll. Outsourcing the payroll function allows the human resources department to concentrate on the core business activities.

2. Cost Reduction

70% of the reason why employers outsource is cost reduction. Outsourcing the payroll function can significantly lower the direct costs involved in processing payroll. From labour hours to software used for payroll and from training related to payroll to keeping up with the payroll laws, there are many payroll-related activities conducted each month. These activities amount to an apparent expenditure that can be harsh for the company. Outsourcing the payroll function cuts off all these cost-related activities performed each month in a company.

3. Evading Penalties


Several businesses – big and small incur penalties for improper payments and filings related to payroll tax. Non-payment, errors, and late payments of payroll taxes lead to costly penalties. Payroll mistakes don’t just cause legal problems with the government but also angers employees.

It is challenging for small and medium businesses to stand firm against the employees and the government for incorrect reporting or payroll mistakes. All this leads to audits and penalties, which is quite a harassment. Rules and regulations are never constant, and it is not easy to stay put with them.

Professional payroll service providers are skilled and constantly updated with the latest change in the rules because this is their core service, and they are required to stay updated with it. Besides calculating salaries, outsourced payroll provides also takes care of filings, payroll taxes calculation and payments. They help you stay safe from legal problems while keeping your business in compliance with all the rules and regulations.

4. Experts to do the job

As we already discussed, it is hard for business owners to stay updated with the ever-changing rules, various government forms, rates, benefits, etc. Businesses would require hiring multiple employees to fulfill all these jobs. Moreover, if an employee who is already trained and an expert resigns, then it would be a setback for the business. The new employee hired would have to put through training and be given time to master the payroll. This is a never-ending cycle of problems that businesses undergo.

Outsourcing to a payroll service provider ensures that your job gets done through experts. Whether a person of that company resigns or is hired is not something that would concern you because your payroll and all the related compliances will be executed each month. There are different things taken into consideration before a final salary is prepared. With experts at your disposal working on intelligent software programs, you wouldn’t have to worry about errors or delays in your job. You just need to make sure that you outsource the payroll to an experienced payroll service provider.

5. Security

Processing payroll is quite risky, even if you have trusted employees working for this job. Tampering of company files, identity theft and misuse of funds are some of the risks involved with payroll processing. Even the software that is used by the business poses a risk when it comes to its security. There have been innumerable cases of fraud and unethical activities that have been caused because of misusing the payroll software.

Outsourcing the payroll function keeps your data confidential. Not just does outsourcing keep your data safe and protected from being accessed by employees of your company, but they also take several security measures that support the payroll data safe from any online fraud.

6. Avoid Technology Advancement Related Costs

Having software for payroll processing doesn’t mean that the job gets easier. The software requires regular updates and maintenance. The software they are using must have the latest tax tables inserted in the system before they can efficiently process payroll for their business.

We have already discussed the penalties and the problems that may arise when payroll tax is wrongly calculated. Software upgrades and maintenance fees are ongoing cost that the business must bear. Outsourcing the payroll function eliminates all these extra costs to the business while running the payroll processing done timely each month.

7. Payroll Processing – an Expertise

If the person taking care of your payroll is on leave, then an overworked HR personnel or an accounting staff or any random office manager are not the ones who should be given the responsibility of taking care of payroll processing. A cloud of legal insecurities always hovers on the business in such situations. Outsourcing the payroll function steers you safe from all these issues. You will not have to worry about any laws and payroll regulations that may lead to any problems.

The payroll service providers are skilled and trained on these rules and laws. Your business just receives guaranteed services. Besides safeguarding data security or saving time and money, you are also relieved that your payroll is being handled by experts. Your employees may also be able to achieve these skills of handling the payroll department, but this is both time consuming, expensive, and requires a lot of effort.

Vacations or illnesses of their employees don’t stop you from receiving the services promised by the payroll service providers. Outsourcing also exempts you from teaching the newly hired employees to understand the payroll system of your business. The outsourced service provider offers to train employees to report their working hours, so they are able to communicate their work hours without any problems.

8. Direct Deposit Made Easy

Things have become digital around us, and all employees look forward to receiving their salaries directly in the bank. Direct transfer is also safe and eliminates fraud. The salaries dispatched also remain confidential and helps in preventing personal feuds that may arise between employees and/or the employers regarding the individual salary being paid.


Transferring directly to the banks requires visiting the bank. This is both time-consuming and requires a lot of paperwork to be done before the amount is dispatched to the individual bank accounts of the employees. Outsourcing the payroll function ensures the employees receive their salaries on time while the data is kept confidential, which only the employer has access to.

9. Carefree Payroll Processing

We discussed several problems that are associated with payroll processing. It is a challenging job and things get stressful for the employer and the HR department/accountant that is taking care of the payroll system.

Outsourcing the payroll function ensures that the employer and the employees are able to work in a stress-free environment. You are simply required to furnish the basic information, and your payroll service provider takes care of the remaining things. You get guaranteed payroll services that are free of issues, your payments are made on time, and the payroll tax is filed on time without errors. This enables you to focus on your business and how you could grow and make it more profitable. A stress-free and clear mind is where the greatest ideas are thought of. Outsource your payroll and run your business lucratively.

These are some of the compelling reasons that you can explore while outsourcing the payroll services of your business. 


Reliable Payroll Service Providers

Paysquare performs all payroll-related tasks and enables you to add value to your business. We are a valuable and cost-effective solution to performing the administrative duties of your company. With over 20 years of experience in processing payroll for various companies, we have gained the trust of several companies that have grown and expanded by offloading the payroll challenges to us. We offer an array of outsourcing services, including accounting, temporary staffing solutions, and also take care of international payrolls. Our company uses advanced AI-based software to ensure that we generate error-free reports for your business. Several businesses trust Paysquare for outsourcing jobs!

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