Should a Startup Outsource Payroll or do it In-house?

hr management system

Launching a business from scratch is no easy feat to begin with and neither is deciding on whether to outsource an effective hr management system or do it in-house. Both options carry considerable weight in the benefits they deliver, whether it’s saving time and money, improving data security or guaranteeing compliance measures. Larger companies and multinationals have a generous budget to create an in-house payroll department. More often than not, outsourcing is viable for start-ups because it allows businesses to use their limited resources, time and money more efficiently and effectively. 

Save Time 

One of the biggest limitations for start-ups is the lack of human capital since the core team is usually quite small. If you decide on in-house management, your staff will be required to first learn the necessary skill set and then devote significant time and attention to carrying out the necessary series of checks and balances to ensure there are no errors come paycheck time. It is necessary to ensure that the company’s talent focuses all their time and energy on the projects, which will increase business growth and not on intense administrative tasks such as managing payroll. 

Focus on Business

Entrepreneurs think that the hard part is getting funding for their business idea; however, they quickly realize that dealing with back-office processes such as hr payroll software can be just as difficult. You can decide to handle payroll accounts in-house, but that involves recruiting and hiring the right personnel, which not only adds to your overhead costs but demands extra staff to manage the new hire. By hiring outside experts to effectively routine tasks such as payroll and accounting, start-ups are able to encourage their core team to do what they are meant to do: build the business.

Secure the Data

Generally speaking, payroll consists of details on employee wages, taxes, deductions, benefits and general policies. In addition to all this, each employee’s payroll records include personal data such as an address, birth date and bank account data. That’s a lot of sensitive information for any company department to deal with responsibly, let alone a start-up. Access to an employee’s personal records needs to be restricted, a task that becomes difficult to carry out if your company has limited time and resources. If you outsource, however, you can hire a highly trained team who will ensure that all security flaws are dealt with and that your employees stay clear of identity theft danger so no one person can tamper with records for personal gain. When data is outsourced, it is stored on highly secure servers complete with state-of-the-art encryption technology.

A Little Extra

Start-ups today have several options when considering effective payroll solutions. Some hope to reduce costs and opt for in-house solutions such as hiring a payroll coordinator or implementing payroll software. While both these choices can do the specific job of calculating costs and distributing paychecks, they have little reach when it comes to dealing with a company’s other specialized services such as health benefits and human resources support. An outsource department will be able to meet any start-up specific needs to help your business grow and continue to add to its bottom line without sacrificing its staff’s precious time and energy.

Business owners of small companies are conflicted about whether to outsource payroll management or choose in-house instead. Many start-up employers think it’s logical to undertake payroll and accounting tasks themselves; however, they fail to understand that they will end up misusing their time and resources. When administrative tasks such as payroll management are outsourced to a professional team, valuable time and energy is freed up and can be used to put the focus back on what the business is all about.