Managing your business’ payroll involves more than writing out checks and making sure your employees get paid on time. You need to keep accurate records, calculate and pay payroll taxes and communicate effectively with employees. With all of the other day-to-day responsibilities, many business owners find that they can simplify the payroll process by using an outsourced payroll provider. Here are seven benefits to outsourcing your payroll:

Save Time

Outsourcing your payroll is typically more efficient than processing payroll internally. Leaving payroll to the experts, frees up time that you can devote to other parts of your business. Whether it’s your time or your staff’s time, chances are the hours you’re spending doing payroll could be better spent closing more deals, improving customer service or fine-tuning business operations.

Reduce Costs

Many business owners underestimate the cost of processing payroll internally, by failing to account for all of the hours employees spend maintaining payroll paperwork. A cost assessment usually shows that a business saves money by outsourcing payroll costs.

Avoid IRS Penalties

Calculating federal, state and local employment taxes and filing payroll-related tax paperwork can be a headache. If it’s done incorrectly, your business may face penalties. According to the IRS, 40 percent of small businesses pay a penalty for late or incorrect filings and payments. Many national payroll services provide a tax guarantee: providers take responsibility for penalties when they do occur. In many situations, this alone justifies outsourcing payroll.

Ability to Offer Direct Deposit

Providing direct deposit is difficult if a company chooses to handle their payroll internally. Increasingly, businesses are recognizing the value of offering direct deposit. Not having to make a trip to the bank is an important convenience for employees. For business owners, direct deposit eliminates time-consuming paper handling and the need to go through individual payroll checks every pay period.

Enhanced Security

Payroll processing is complex and a potentially risky business operation. There’s always a risk of identity theft, embezzlement of funds or tampering with company records. When using in-house payroll software, there’s always the risk of not knowing how secure your payroll data is on the network. Outsourcing your payroll offers a safe solution for your confidential business information. In addition to multiple backups and server locations, a quality payroll provider invests in the best systems for storing and protecting data because they understand the peace of mind it provides to customers.


Hiring a professional payroll provider means hiring individuals who know payroll processing inside and out. These individuals specialize in payroll best practices and compliance with government regulations. It’s what they’re trained to do, and they can provide you assistance when you need it.

Avoid Technology Headaches

The days of manually calculating payroll are long gone. The advance of technology has means that payroll software can prepare calculations in a fraction of the time a person could do it manually. Additionally, when you outsource your payroll, you don’t have to worry about whether you have the latest version of your payroll software and the most recent tax tables installed on your computer. Outsourcing payroll removes these headaches and keeps things running smoothly.