Why Are Some Small Businesses Reluctant to Use an Outside Service for Employee Payroll?


Quick Answer

Small business may be reluctant to use an outside payroll service include the because of the high cost, difficulty in accessing employee records, security concerns and delayed correction time. While using an outside payroll service may seem like a good business decision on paper, a small business should weigh the pros and cons before signing a contract with a company.

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Full Answer

Most companies run payroll at least once a month and sometimes even twice a week or weekly. Doing payroll in-house can take quite a few man-hours, causing some small business owners to consider outsourcing the payroll duties to a payroll service. There are, however, some considerations that may cause an owner or manager to think twice.

If there are few employees and payroll is fairly straightforward, it may be cheaper for the company to do payroll in-house; otherwise, the business owner may end up paying for extra services that are not needed. Doing payroll on-site also has the advantage of keeping records in a convenient location where they can be easily accessed whenever they are needed. Similarly, there are security concerns about keeping sensitive personal data at an off-site location. Finally, if there are any errors in pay, it might take longer to make a correction than when the payroll is done in-house.

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