No matter what business you run, how many employees you have, or how you decide to operate, there is one thing every business needs to consider and that is payroll. You have two options when it comes to your payroll, and they are to do all of your payroll in-house or outsource your payroll to an outside company. This article will discuss which option is the most profitable for businesses.

the legal side

Payroll is not a happy business and there are legislations in place to ensure that companies use the correct procedure. This legislation evolves regularly and it is your responsibility as a business to keep up with any changes. If you want to do your payroll in-house, you’ll need to make sure you’re aware of all the legislation and keep up with any changes. This requires time, effort and money. If you outsource your payroll then you won’t have to worry about the legislation as the company you outsource to will be responsible for keeping you in line with the law.

Personal expenses

Perhaps one of the biggest costs for a company that decides to do payroll in-house is personnel costs. It may be the case that you have full knowledge of the payroll procedure, but if not, you’ll need to hire a couple of payroll whiz kids to help you out. This will cause your business to spend funds on hiring, training, salaries, vacations, pensions, and other general personnel costs. Using an outsourced payroll company means you don’t need to have in-house staff or deal with the associated expenses.

IT expenses

In addition to staff costs, IT costs can also be quite significant for those who opt for internal payroll. You’ll need to consider the costs of hardware, software, upgrades, maintenance, and other potential IT expenses, such as ongoing support. If you decide on an external company for your payroll, then you will be eliminating these costs.

Other expenses

There are some other minor expenses associated with internal payroll. Stationery items may not cost much on their own, but when you consider that you’ll need to purchase items like ink cartridges, paper, pens, envelopes, and payment receipts, then you can easily see where the costs start to add up. Once again, outsourcing your payroll frees you from these expenses.

Internal vs. subcontract

In general, outsourcing payroll can be a much more cost-effective option if you only have a handful of employees. Of course, outside companies will charge you for their payroll services, but often the fee they charge can be much cheaper than all the costs mentioned here. SMEs will benefit most from outsourcing, while larger companies with considerable levels of staff will likely benefit from using an in-house team.