The Pros And Cons Of Payroll Services

Payroll Services

Using a payroll service for your company has many pros and cons. Here are the key factors to consider: Cost, time, liability, and convenience. Read on to learn more. Regardless of which option you choose, consider these pros and cons before deciding. Outsourcing payroll is smart for businesses with more than one location or needs to process payroll frequently. Outsourcing payroll allows you to focus on other tasks, while a payroll service can keep a closer eye on details.

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How much does it cost to use payroll services? Many payroll service providers offer different pricing packages suited to small businesses. The basic fee ranges from $0.80 per check to $2.00 per payroll period. More advanced payroll services can cost from $4 to $9. Considering how many employees you have and how much you need to handle, this price can increase quickly. For smaller businesses, the cost of payroll services may be too high.

A good payroll service may have reasonable pricing. Some services offer introductory pricing for six months, after which their rates increase considerably. Check the fee schedule to see if there are any upcoming price increases. You also have to consider whether you need other services aside from payroll. Some firms charge separate fees for additional services, such as taxes, if you want to file taxes. Make sure to find out how much each service will cost before committing to a plan.


When outsourcing your payroll function, there are many pros and cons. Using a provider is often less costly and easier to manage. However, the payroll function requires a lot of precision and consistency, and the complexity of the task is only increasing as more companies are globalizing their workforce. Outsourcing your payroll is a good choice if you don’t have the time, resources, or expertise to perform the job yourself.

Depending on the size of your business, payroll services can be expensive. While payroll service costs can be as low as $200 per employee, these services aren’t always the cheapest option. While they’re usually more convenient than in-house payroll systems, maintaining employee data may not be seamless. Furthermore, payroll providers may charge you extra for additional services. Some providers offer ancillary services they don’t necessarily need, such as tax preparation.


The liability of payroll services is a critical part of any business. While it may seem small, payroll liabilities represent the money owed to your employees at a future date. Payroll liabilities can affect your budgeting in some ways. Not only are the wages paid to employees a liability, but they can also include health insurance contributions, retirement funds contributions, and even wage garnishments. Contact a professional if you are unsure how to calculate your payroll liabilities.

Tax liabilities are another area in which you need to consider. While payroll services are not required by law to pay taxes, you’re still responsible for them. This includes withholding, remitting, and paying any applicable penalties. A third-party payroll service can fail to pay taxes and withhold them, so you’re still responsible for the taxes. If you cannot pay taxes, you could be subject to penalties, including a loss of income.


Aside from calculating employee paychecks, payroll services also handle various other administrative tasks. These tasks include determining withholding taxes, deducting employee contributions, and updating vacation and sick pay. Outsourcing payroll can reduce your costs significantly because the cost of hiring a full-time payroll manager is eliminated. The outside service will process employee checks for you and update your employee payroll information through a user-friendly interface.

Payroll services also save time. These services handle everything from deposits and withdrawals to filing federal and state taxes. Unlike in-house payroll departments, they also integrate benefits administration and time and attendance management to help you streamline your banking. Outsourcing your payroll to a payroll service will save time and money while reducing the risk of errors or inaccuracies. And because the payroll provider is responsible for filing all the necessary forms and managing the compliance aspects, you’ll be able to focus on running your business.