Outsourcing Your Payroll Management: Why and How?

Payroll management can be a hassle for huge MNCs and small establishments alike, but the problem really begins to become apparent for smaller companies when they attempt an expansion. Limited budgets, insufficient workforce and a lack of experience are all factors that suddenly begin to present themselves at a time when the company is already in the process of expanding.

In the following paragraphs, we will briefly go through why and how these problems can be handled better with the help of third-party payroll services for small businesses. Before we get started, let’s briefly go over how a payroll management service works first.

Payroll Outsourcing Services: What are they?

When an external company is hired to handle the payroll management and administration duties on your company’s behalf, the said company is providing payroll outsourcing services to your company. In case of small businesses, the role is usually handled by HR, accountancy, and sometimes even the business owner himself/herself, while starting out. As managing the payroll gets more complicated with time, working with external payroll service providers becomes necessary.

Why Do Companies Outsource Payroll Management?

External payroll services for small business establishments are generally needed when the current system feels insufficient, inefficient, and counterproductive. The realization may come at any time but, as already stated, those problems become more serious and apparent after a small company begins to grow. Those who used to handle payroll management duties previously, now feel overstretched and overworked due to the added responsibilities that go hand-in-hand with business growth. Consequently, outsourcing payroll management becomes a natural choice to save time, money and reputation. It also allows the core executive team to focus more on growing the business in a sustainable manner.

Realization: Signs that the Company Needs to Consider External Services

There is no point in spending money on services that you don’t really need, but how does that work in this particular scenario? There are some obvious signs of poor payroll management such as:

  • Mistakes are being made quite frequently in monthly payroll management
  • There have been errors in payroll tax fillings previously
  • Technical errors are leading to noncompliance with the overcomplicated IRS regulations for small businesses
  • Employees are receiving payment later than they should
  • The company is facing audits and tax penalties because of those mistakes
  • HR or the accounts department feel ill-equipped to handle the current payroll workload without added assistance

These signs are interrelated and will often come together to make payroll management seem like a burden. Outsourced or external payroll services for small business organizations can mitigate these signs or issues to a great extent, if not eliminate them altogether.

How to Choose a Payroll Management Service Provider

Now that we have discussed why and when payroll services for small business operators become essential, let’s go over the common questions regarding how to go about it. First and foremost, rest assured that there are several payroll services for small companies to choose from, but only a handful of them are worth trusting. When a company partners up with a payroll management service, they hand over crucial, personal, and financial data involving their employees and the company itself.

This means that there really is very little scope for experimentation here. It would be ideal if you do not make the mistake of selecting an incompetent or, even worse, fraudulent outsourcing service for your payroll administration duties. Ensure personal, legal, and financial safety by working with a company like G&A Partners, which provides comprehensive HR and payroll services for small business establishments. Working with an experienced, established and well reputed payroll management partner will ensure that the company really receives those expected benefits of outsourcing payroll.

Expectations: Meeting Needs

Different companies have different expectations from their payroll management partners, and they will differ widely based on factors such as how complicated the payroll system is, the volume of the work, their budget, etc. It is therefore a better approach to expect your payroll partner to take care of everything that you need them to handle.

Keeping aside the complexities and the unique needs, payroll services for small business corporations usually include timely payroll processing, calculating, and filing tax withholdings, deducting the deductibles from each paycheck, calculating and disbursing benefits, compiling and organizing payroll reports, recordkeeping, digitizing payroll processes, securing digitized processes, securing the shared data and checking all records for any possible errors.

Expectations: Man and Machine

For all that to go smoothly and without any significant, uncorrected errors, a payroll service provider must incorporate automated software as an integral part of their payroll management system. When humans proficient in payroll management work with up to date, smart payroll management and HR software resources, only the best results are achieved for their clients. Although using software resources has become the norm now for all business service providers, you should still check and confirm with your provider to see if the software tools they are using are up to the standard of today’s smart applications.

Budget Considerations: Is It Cost-Efficient?

If an organization is offering payroll services for small business establishments, it is to be expected that their prices will be competitive. This is not to say that the cheapest services are ideal, just because your business is small. On the contrary, if their plans are too cheap in comparison to the market, it is likely that they are cutting some corners.

The principle at work here is that a payroll management service provider should offer scalable plans, so that their services make sense to smaller establishments as well. It is cost-efficient only if you are paying for services that the company actually needs. Also, the total cost of availing any plan must always be lower than hiring and maintaining an inhouse payroll and HR administration department in its necessary capacity. Scalability allows a client to climb both up and down the ladder of the service provider’s respective packages, depending on their business’s needs at that time.


Dee is a well-respected business journalist with a deep understanding of global financial markets and a talent for uncovering the stories behind the numbers. With over 20 years of experience covering the business beat, Dee is known for his in-depth reporting and analysis of industry trends, as well as his ability to make complex financial concepts understandable to a wide audience.