In-house payroll vs outsourced payroll

As a business, it’s important that your payroll is accurate and compliant. Payroll has been one of the most outsourced processes in the business world. It is possible to keep your payroll in-house. Often all you need is the right software and a dedicated team.

Payroll is a complicated process and it’s important to do what’s right for your business. Firstly, if you keep your payroll in-house all data is handled internally. Alternatively, you can outsource your payroll to an external provider. It’s important to consider all options for your payroll, as this will help you avoid hidden costs. For example, training or expensive change requests.

Choosing the right payroll option for your business isn’t easy. So, we’ve made it simple. Here you will find the benefits and challenges to both processes.

What is the difference between in-house payroll and outsourced payroll?

The main difference is who handles your payroll. In-house payroll will be calculated internally. Outsourcing involves using an external provider.

The payroll process is different for every provider. Once you sign up, you will follow instructions to kickstart your new payroll process. You will have access to a support team for any payroll queries you have. Once your data has been inputted, your provider will process your payroll.

Choosing a provider can be tough if you are unsure of your requirements. Preparation is key and will often save you money in the long-term. Firstly, we’ll review your existing processes, so your requirements are clear. We’ll do the heavy lifting and ensure your transition runs smoothly.


Benefits of an in-house payroll

One of the main benefits of in-house payroll is the complete control. It allows you to create a unique payroll experience for all your staff. Secondly, in-house payroll removes the need for a third party. This will lower your risk of financial scams or compromised data. Thirdly, you will have instant access to your payroll history and data. This offers you greater flexibility to make any last-minute changes.


Challenges of in-house payroll

Often, in-house payroll is more costly than outsourcing to a provider. Be mindful of hidden costs when it comes to in-house payroll. For instance, licences and maintenance of your chosen software. Additionally, human errors or admin-heavy manual processes will increase your cost. Finally, penalties for non-compliance or errors can be high. When you outsource, your provider takes on the risk of penalties.

Another hidden cost is training for your team. It’s important all your employees are able to confidently deal with any payroll issues. For example, missed payments or data errors. Training is a worthwhile investment and will save you money in the long-term.

Your payroll can quickly become vulnerable, especially if your employees are on sick leave. You may be at risk of incomplete payroll if only a few members are responsible for the process. Fortunately, this can be reduced through additional training. Again, this is an added cost, but your payroll will be covered.

In-house payroll can be time-consuming, particularly for management. Often you will be required to approve payroll data or updates to software. As your business grows, it’s important that your payroll is able to keep up.

If your business quickly expands, you may require additional support. Whether it’s change management or new payroll software, we can help.


Benefits of outsourced payroll

Outsourcing your payroll can be a simple transition with many benefits. It offers an existing streamlined process that is set in place. For some businesses, it can be a straightforward change.

If you are looking to outsource, there are a few things to consider. Firstly, you will require a strong business case change current processes. Without the right support, this can become costly. Fortunately, we’re here to help you transform your payroll.

Many businesses choose to outsource for a number of reasons, including guaranteed compliance. Most outsourced providers have payroll software that is HMRC compliant. This means your payroll will be in-line with any regulations.

One of the key benefits for outsourced payroll is the time-saving advantages. Outsourcing gives you the time to focus on your business. With the right payroll provider, you should have round-the-clock support.


Challenges of outsourced payroll

Outsourcing won’t give you complete freedom. Firstly, you may need to change internal processes to fit with your provider’s existing process. Change management can become a huge task to handle in a business. It’s important that all team members are comfortable with the new process.

You may carry out some of the work yourself, too. For instance, adding new team members onto your software and supplying all relevant employee information.

Reputable providers will share the expected costs of your payroll up-front. You will often pay a monthly fee, on top of a set-up cost, for your payroll. It is important to know exactly what you need from your outsourced provider. This will avoid any costly implementation charges.

Outsourced payroll can get expensive. You may require additional support, and this will increase the overall cost. Also, keep in mind that reports or any last-minute adjustments will cost you more.


Payroll plays a major role in keeping your business healthy. It can boost employee morale and ensure your business runs smoothly. So, speak to us today to find out how we can support you.

Find out more about how we can help you by calling Global HRIS today on +44 161 317 2903 or get in touch through our website.
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