In-house Vs Outsourcing Payroll: The Pros & Cons

For any small to medium sized business, being able to handle your payroll correctly is essential. This will not only ensure your staff get paid the right amount on time each month but also that the correct information is transmitted to HMRC. This last point is particularly worth noting. Any issues with incorrect calculation of national insurance or tax contributions for staff could land your business in hot water.

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Dealing with this as required breaks down into two choices - you either handle it in-house yourself or outsource it to an external payroll agency. Naturally, if you choose to deal with it yourself, you have to employ staff to run the payroll and deal with any queries that arise. If you outsource this task, you would let an external payroll agency do it all for you.

But which is the best option to choose? To make the correct choice for your own business, it is worth knowing the pros and cons of each.

Outsourcing Payroll

If you choose to outsource your payroll then there are some great advantages to doing so:

Outsourcing Pros

  1. Saves time doing it all yourself. Rather than spending vital work time on calculating wages and deductions, you are free to focus on your core jobs.
  2. No need to keep up with the frequent changes to payroll laws by HMRC as expert staff at the payroll agency will ensure you are always compliant.
  3. Saves your business money in the long term on having to employ permanent staff and buy them equipment.
  4. Access to staff that regularly deal with a wide range of complex payroll issues and therefore are familiar with how to approach most tasks.

But what about the downsides of outsourcing? Here are the main ones to look out for:


Outsourcing Cons

  1. Requirement to disclose sensitive data to a third party which may not sit well with you.
  2. Limited ability to make last-minute changes to payroll once data is sent to an external agency – although a specialist provider could still submit changes.



Of course, there is always the option of running your payroll in-house. But what does this offer in terms of benefits?


In-house Pros

  1. Extra control as your own staff are the ones in charge of the processing with instant access to past payroll data.
  2. More secure as no sensitive data leaves your premises.

However, there are some disadvantages to handling your own payroll:


In-house Cons

  1. Increased costs for business as you will need to hire staff, train them and buy equipment for them to use.
  2. Responsibility and stress of having to keep up with the latest payroll legislation.
  3. Risk of internal staff using their position to steal money, breach confidentiality or purposely miscalculate contributions.

Let eSlip Help Today

Many businesses now will opt to go with outsourcing their payroll for the reduced hassle and cost savings it brings, along with the extra time it creates to focus on their core work. Call eSlip today to find out how our payroll services for small businesses work and how they can help you grow.

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A Free Guide To Outsourcing Your Payroll