Outsourcing your payroll is one of the best decisions you can make for your small business. It takes the meticulous work off of your hands, and ensures it’s done correctly and on-time, while giving you more time to grow your business. Removing yourself from the payroll process gives you both peace of mind and a weight taken off your shoulders.

The success outsourced payroll relies on the relationship between your company and the payroll provider. To help ease the transition and administration of payroll and benefits, here are some best practices to consider:

Know What You Need

Before choosing a payroll provider, you need to decide what you need done. Processing payroll involves a myriad of tasks. Do you want a provider who just cuts checks? Are you expecting them to take care of compliance and tax administration as well? Do you need services for multiple states? Make sure you know what your requirements are so you can find a provider that has a stellar track record in exactly what you need.

Prepare Employees for Transition

Inform your employees so everyone knows what to expect. Payroll is the reason why your employees show up to work every day, so make sure they know what functions remain in-house and what is being outsourced. Employees should understand how their hours are calculated, how overtime is handled, and who talk to if they have concerns about their pay.

Don’t Completely Eliminate Your Payroll Department

Payroll isn’t one of those functions that you can just hand off and forget about. It is a partnership, so you don’t want to eliminate your payroll department completely. Retain a few employees who are knowledgeable in this area to provide checks and balances and who can answer questions, authorize decisions, etc.

Maintain Access

Outsourcing payroll functions doesn’t mean giving up all your responsibility and oversight. You should always maintain access to any information you need. It’s also helpful to integrate past payroll data into the systems so that you can review it any time you’d like without having to call the vendor and ask permission.

Plan for Growth

The initial contract may include only simple terms for running checks every two weeks. Anticipate change and plan for growth by choosing a company who can take it on. Be sure they can handle regulatory changes, personnel changes, increased employees, garnishments, benefits, etc.

Communicate Early and Often

The decision to outsource payroll affects everyone. It’s not like running to the store to pick up a gallon of milk every other Friday. It requires an open and collaborative partnership wherein both parties will do their part to create an efficient and successful system.

Outsourcing payroll functions can be a great business option for smaller companies that don’t have the in-house expertise to deal with tax liability, payroll regulations and federal reporting rules. However, it is not an instant solution that will miraculously run by itself. Working with your payroll company as a business partner can ensure you’ll save time, money, and optimize your resources successfully.

Sources: https://www.dvphilippines.com/blog/4-best-practices-to-succeed-in-payroll-outsourcing


Giving up the power of payroll can be a little tricky. If done right though, it can be liberating. Here are some tips on how to outsource your payroll efficiently and productively.