All the people who offer their services to an organization are termed as employees. But, they are classified based on various criteria;

You can be associated with the company on a permanent basis or a contract basis. Your remuneration can be calculated depending on either the number of hours you have put in or the number of days you have been at work. You can be remunerated daily, weekly, bi-weekly or monthly.

There must have been days when you must have been confused about the amount you received as pay from the organization. There must have been days when your calculation of your pay for a particular month did not tally with what you received. There must have been days when the amount you got was more than was expected, or days when the amount you received was less than expected. The root cause of all these tensions and confusions lies in what we call the Payroll and it concerns itself with the aspects of salaries, wages,overtime payments, bonuses, tax withholdings, deductions and allowances. There is no denying that payroll is applicable to all the employees of the organization and is generated at regular intervals.

It is usually felt and said that only bigger establishments and organizations should and can afford to have in-house payroll services, while the small businesses are advised to outsource their payroll services. People managing small businesses have a big question in their minds when it comes to payroll;

Why should I outsource my payroll activity instead of getting it done by my employees itself?

There is no hard and fast rule that no small business should accommodate an in-house payroll service. You can always have your own employees working on the payroll activities pertaining to your company. But, you also cannot ignore the fact that there would be some drawbacks attached to organizing in-house payroll activities, especially when the business is small or is in the nascent stage.

Read on to understand what the drawbacks of housing the payroll activities within the company could be:

It is a known fact that the payroll activities consume lot of time. But, we also have to consider the involvement of painstaking efforts from the people involved in the monotonous payroll activities.

One cannot deny the fact that payroll must be handled by people who are well equipped with all the tax related laws,statutory requirements and generation of timely payroll reports. Can a small business manage to employ and keep him employed with them for long? When the person leaves, he does not go alone. He leaves with all the knowledge accompanying him. Don’t you think it is an arduous task to find another good fit to the position?

One mistake in the entries or calculations can lead to a somewhat chaotic situation with all the affected parties trying to corner the people involved in running the payroll. Also, the in-house employees involved in the payroll might exhibit some amount of negligence owing to the fact that there is no issue of the company losing business on account of their negligence. Probably, they would be of the attitude that their mistakes could at the most could make them incur the wrath of the affected people. Moreover, accountability is higher when it is handled by the external payroll service provider as it is the question of their credibility. Utmost care is taken because there are huge chances of them losing their business to another payroll service provider.

Businesses especially, small and medium sized should try to stick to decrease their costs by sticking to what they can do best. They cannot afford to waste their resources, energies and time.

Finally, changes in payroll are witnessed very frequently owing to its connection to the financial announcements, modifications and adjustments made by the respective governments. Can a small business afford to keep up with these constant changes when this time could be used to enhance productivity of the business?

It is now left to you to decide whether you could do better by payroll outsourcing or by opting to have in-house payroll.