Outsourced vs. Inhouse Payroll?
If you are considering moving away from an outsourced model for managing payroll/HR, here are a few keys items to consider as you analyze the financial aspects. There are many advantages with outsourcing; however, it takes careful consideration of both hard and soft costs to make this determination.
Costs to Consider When Comparing In-House Payroll Software to Outsourcing
- The purchase costs of in-house payroll, HR, Benefits Administration, and Time and Attendance applications
- Annual maintenance contract to support the systems
- Upgrade costs
- Training costs
- Internal support costs such as IT department
- Server space and back up
- Annual costs for paper stock (payroll reports), check stock, envelopes, and postage
- Tracking and processing wage garnishment checks
- Printer maintenance that processes the payroll
- Toner for the printer (MICR toner)
- Time spent for check signatures or check imaging
- Time to stuff, seal, and sort checks
- Banking fees for direct deposit
- Time and materials for year end W2s and 1099s
- Time to calculate and prepare per processing, monthly, quarterly, and annual taxes
- Hard dollar costs responding to tracers
- Fines or penalties for tax filing errors
- GL costs for preparing, posting and updating
- Preparing and producing reports
- Time for reconciling the payroll account
- Paid time off liability if not calculated properly
- Time reading timecards or preparing time clock file for import
- Percentage of payroll costs for human error
• Time theft (buddy punching)
