Manual Payroll Vs Payroll Services

Managing payroll is a critical factor for all businesses. After all, employees keep your business running, so they must be paid accurately and punctually. Not to mention, it’s the law.

One of the most important decisions regarding payroll is choosing the correct approach for handling it. Should you handle it manually? Or would it be beneficial to outsource it to a third party?

As a business owner, you have a multitude of options when it comes to handling your payroll. Which, of course, come with different costs and considerations.

Read on to compare manual and outsourced payroll options exploring the key benefits to each method and key considerations to help you make an informed decision.

Why do businesses outsource their payroll needs?

You might be thinking why should I outsource my payroll if you can do it manually? There are several reasons why you might consider a third party. Especially, when it comes to calculating wages, employee timesheets and overtime.

Firstly, outsourcing payroll can save a company both time and money. Maintaining payroll manually can be extremely time-consuming and outsourcing eliminates the need to hire or train anyone internally to take care of it. It also frees up your time and resources to be allocated to more important duties.

Then there’s the compliance aspect of managing payroll manually. A common worry when doing payroll internally is managing the complex calculations involved, which can be challenging to navigate on your own. Manual data entry, tax withholdings and compliance tasks can be time-consuming and prone to errors.

Outsourcing to a third party provides access to experienced payroll management experts, ensuring compliance and delivering peace of mind. Knowing that you aren’t at risk of payroll errors is one of the most popular reasons to partner with a reputable payroll provider.

Lastly, manual payroll can be limited, and you may struggle to accommodate changes in business growth and pay structures. A third-party payroll provider can give you a payroll management system that grows with your business and streamlines your processes as you expand.

Does a payroll service have to cost the earth?

Of course, there are costs associated with both manual and outsourced payroll options, but which is the most cost-effective option for you? 

A payroll service doesn’t have to cost the earth and can save you money in the long run by helping you avoid costly mistakes. When you handle your own payroll, you are at risk of errors and inaccuracies that can cost more than investing in external services.

Manual payroll processes often take more time and can lead to mistakes, which can result in even more costs for fixing errors and dealing with compliance issues. Plus, the costs of the time spent on manual calculations, entering data, and keeping records can really add up. Inefficiencies in manual payroll can also affect how happy and productive employees are.

So, while manual payroll may seem cost-effective on the surface, you should consider the labour costs, training costs and compliance-related penalties before ruling out a third party due to outsourced payroll costs. 

What are the pros and cons of using a payroll service?

Of course, every method comes with its own set of pros and cons. Let’s take a look at the various advantages and disadvantages of outsourcing payroll.

Pros of payroll services include:

Saving time and money

Managing payroll involves hours of data entry, calculations, tax filings and compliance tasks. By outsourcing your payroll process, you eliminate your need to dedicate internal resources to take on these time-consuming admin tasks. This saves you time and frees up valuable resources within your business so you can focus on other core initiatives and growth opportunities.

Accurate payroll data

It’s essential that your payroll data is accurate. Using a payroll service can help you to minimise errors and penalties. When you handle your payroll manually, you are at risk of incorrect tax calculations, compliance violations and late payments all of which can lead to costly penalties and damage your business reputation. When you outsource your payroll, you can leverage specialised knowledge and reduce risks.

Cost effective

If you are managing your payroll manually, you will have to employ resources to maintain an effective payroll system. A payroll service helps you to reduce labour costs associated with payroll processing and training resulting in huge cost savings for your company. It can also save you money on software costs and compliance-related expenses.

Enhanced security

Third-party payroll services prioritise safety and security and when you outsource your payroll process, you can leverage advanced technology, compliance expertise, secure data handling practices and disaster recovery measures that you wouldn’t usually have access to. This helps you mitigate the risk of a data breach and ensures compliance. 

Increased flexibility

Manual payroll becomes increasingly challenging as your business grows, making it difficult to adjust to changes in staff levels and business needs. An outsourced payroll service is adaptable and can adjust its service level to meet your ever-changing needs.

Cons of payroll services include:

Additional cost

A potential downside to using a payroll service is the additional costs you will incur as a result. So, what do payroll services cost? The cost will of course depend on the size of your business and the complexity of your payroll requirements. While it may seem that outsourcing your payroll will add to your overall expenses, the value gained by working with a third party will outweigh any financial expense.

Loss of control

When you outsource your payroll needs you will have to relinquish some level of control over your payroll process. This is something that you will adapt to over time and while you won’t have sole control of your payroll needs, you will still have visibility and oversight of payroll operations regardless of them being handled by a third party.

Outsourcing payroll comes with its own set of pros and cons but any drawbacks can be mitigated by choosing a trusted partner and establishing clear expectations and communication protocols.

How does an outsourced payroll service provide value

An outsourced payroll service can provide value in several ways. First of all, it can add an extra layer of security to your payroll process. A third-party provider gives you access to advanced technology with the latest and most powerful security features. This safeguards your payroll data and gives you access to secure login protocols, data backup procedures and firewalls that you wouldn’t usually be able to use with an in-house solution.

You also can take advantage of in-depth knowledge of payroll laws and be sure that you are up to date on the latest compliance standards. An outsourced payroll service grows and expands with you.

Easy employee onboarding and automation of important documents such as P45 are just a few of the additional benefits an outsourced payroll service can provide.

How BrightHR can help with cost-effective payroll

Are you looking to experience the many benefits of outsourcing your payroll needs? As a small business, it is natural to want to keep costs low. However, it is also crucial to streamline your payroll management process as an efficient and effective payroll process is the key to success.

Outsourced payroll can ensure accurate employee payments and help you avoid hefty fines and penalties related to payroll errors.  BrightHR payroll service can minimise administrative costs, help you avoid unnecessary expenses and boost efficiency by reallocating resources in-house.

Want to know how much the payroll services cost? Get in touch with the team to find out how we can save you time and money.