Three Reasons NOT to Outsource Your Payroll

Payroll for small companies

Whether you own a small business or a big one, having your finances in order is critical. Without knowing how much money is flowing in and out of your company, you will never be able to make informed purchases, and most importantly, get your employees paid accurately, and on-time.

For this reason, many people invest in outsourced HR management services. Human resources usually includes payroll programs that are geared toward making all processes surrounding finances much easier for any company. These services can also provide outsourced payroll solutions, so that you don’t have to think about calculating wages, deductions, or taxes ever again.

But there are some downsides to having your payroll outsourced. Here are a few of the disadvantages.

  1. Loss of Control. When you let go, you truly let go. Once you have handed over your payroll to an HR company, you usually won’t have anything to do with the process unless there is a major problem. Most minor disputes over paychecks will be handled by the HR company itself, and accessing key data can be tedious for you. While you will still have permission to view employee wages, you won’t necessarily be able to perform any managerial functions, unless you specify this on your contract.
  2. Untimely Resolutions. If you have an unhappy employee complaining about a lack of funds or a missing paycheck, you won’t be able to give him or her an answer as soon as possible. You will first have to go through the payroll processing part of the HR company, and then officially enter the complaint. They have to investigate during business hours, and then get back to you before you can give the employee a response. You essentially become the middle man in the situation.
  3. It’s on Your Head. Regardless of who makes the mistake in payroll, the blame will ultimately rest in your hands. Your employees won’t care that you have an offsite payroll program taking care of their wages. It is you who will have to give them an answer, you who are going to be held responsible, and you who they are going to complain to every time.

If you are willing to face these challenges, outsourcing would be ideal. But if not, you may be better off struggling through payroll on your own.

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