What are some advantages and disadvantages of payroll services?


Quick Answer

The advantages of using a payroll service include saving time and money and the ability to comply with IRS regulations more easily. The disadvantages of using a payroll service include a loss of control over confidential information and an additional business cost.

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Full Answer

Outsourcing payroll services can be attractive for businesses. By having an outside company handle this task, staff can focus on other work. Also, payroll services tend to be more knowledgeable about IRS deductions. These services can ensure that the deductions are handled accurately and paid in a timely manner, which in turn saves businesses more money by avoiding penalties.

Although using a payroll service may help a company save money, it is another business expense. Some companies may find it more cost effective to complete payroll in-house.

Another potential disadvantage of using a payroll service is that a business must provide a lot of confidential information, such as personal employee data, to an outside company. This can create problems. For example, if the payroll service does not properly handle this information, businesses that use the service could face lawsuits. Another potential problem could arise if the payroll service goes out of business and a company loses the data the service had.

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