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What is your opinion on outsourcing payroll?
Do you think it is reliable? Is it worth the money to outsource it?
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3 Answers
The answer is Yes and No depending on who you outsource to, what size your company is, where in the world your employees are lots of other questions. In general, outsourcing providers are reliable - if they weren't they would go out of business pretty quickly. As for whether it is worth the money - our first ever client still tells us regularly that we are worth every penny. And this is after 6 years of service.
www.apsglobal.co.uk
I've outsourced payroll for three companies I've founded or co-founded. I'm a big believer in outsourcing this function because the service is a commodity and costs FAR LESS than trying to do it in-house, at least for small companies of 1-50 employees (I can't speak to it's effectiveness for larger companies.)
That said, there are often problems, so you'll still need to oversee the process carefully. I've used ADP, Payroll One, and Paychex. So far, Paychex has had the most issues including recording employees and paying taxes in the wrong state (we operate in multiple states), not paying the tax authorities the right amounts, and changing a pay rate without our approval. Payroll One also made errors, but I didn't need to spend as much time micro-managing the process. I didn't manage the payroll function when we used ADP, so I can't comment on their accuracy.
Paychex has worked out well for other people and came highly recommended by our CPA, so I don't think this problem is universal in their company, but I'm starting to think that their software, supervision and training are all contributing to the issues we've experienced.
But even with the problems, I will still continue to outsource this function. It would cost far more to in-source it even considering the time our bookkeeper and I have had to invest in detecting and resolving the errors.
As you evaluate the various providers, get copies of reports and look at how easy they are to understand and how you'll integrate with your bookkeeping system. Our experience has been that a poorly designed report can make inputting payroll into the books confusing and make end of month and end of quarter reporting more time consuming.
Great question. Payroll outsourcing is a good alternative when you want to remove the burden (and stress) from your human resources professionals. If your employees work varying amounts of hours each week or if you have significant turnover, a payroll service can be a time-saving and cost-effective alternative to internal processing.
Some reading material -- When to get small business payroll systems: http://www.buyerzone.com/hr-personnel/payroll-services/bg-payroll-systems/
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