How does Outsourcing Payroll Service Reduce Costs?

how does outsourcing payroll reduce costs

Now more than ever, businesses of all sizes are running on tight budgets. Reducing costs and saving money in any way can be the difference between thriving or having to permanently close. Outsourcing payroll service is one way to reduce costs while simultaneously helping a company grow. Today we will take a look at some of the ways outsourcing can reduce costs for your company.

What is Outsourcing Payroll?

Outsourcing payroll is a service offered by an external company to provide tax, accounting, and payroll support to businesses. Most importantly, payroll partners ensure employees receive an accurate paycheck according to the agreed-upon timeline. In partnering with an external payroll company, organizations can streamline their payroll processes while simultaneously elevating a large administrative burden. 

Outsourcing payroll empowers businesses to:

  • Register and control incidents.
  • Calculate and distribute pay according to the agreed upon frequency (i.e., weekly, biweekly, or monthly).
  • Calculate and manage benefits, such as vacation, sick days, commissions, etc.
  • Simplify regulatory compliance.
  • Operate on a global scale while effortlessly managing payroll.
  • Provide better quality in the provision of services, contributing to product improvement.
  • Operate more efficiently and effectively.
  • Access innovative payroll platforms where they can run reports and manage benefits without the need for local installation on servers.

Save Time

As we all know, time is money, and payroll is a laborious process. When you partner with an external payroll department, you relieve your internal HR department of these responsibilities. These employees can now focus their attention to other critical organizational operations, boosting productivity and increasing your bottom line. For example, instead of focusing on payroll, your team could dedicate their time to developing strategies that strengthen the company’s competitive advantage and drive growth.

how does outsourcing payroll service reduce costs

Minimize Expenses

Calculating payroll can be costly for small businesses, and outsourcing payroll can help companies minimize expenses. Managing payroll in-house is both costly in terms of time and money. Outsourcing payroll activities helps to quantify the visible and hidden costs around payroll management, including managing wages and benefits, distributing paychecks, creating financial reports, and preparing/paying payroll taxes. Outsourcing these payroll operations can save your business the costs of managing your payroll internally.

Minimize Mistakes

Mistakes can be costly, especially when they are related to payroll services. When an internal employee makes a payroll mistake it takes time, and in some cases, money to fix these mistakes. For example, if payroll taxes are filed incorrectly or late, the company will incur late penalties and fees. Payroll professionals dedicate all of their time to understanding the various nuances of payroll activities. By partnering with a payroll professional whose entire focus and responsibility is payroll, a business minimizes the risk of error, missed deadline, or late payroll tax filings. 

Propel Growth

As a business expands and its team grows, payroll becomes more complex and time-consuming. When payroll responsibilities are transferred to an external company, you free up your internal team to focus entirely on its business strategies. More employees require more time to calculate employee schedules/timesheets, manage vacation, deductions, taxes, generate payroll reports, etc. Partnering with an external payroll partner saves time and money associated with these activities freeing up these resources for other organizational uses, such as driving growth and product/service development.


Are your internal payroll functions costing your business extra time and money? If so, then it’s time to reach out to SOURCEitHR. Our payroll experts are ready to manage your payroll for a fraction of your current internal operating costs. With a wide range of service offerings, we can empower your business to grow and evolve without the added HR hassle. Let us help you focus on what matters most, growing your business.

Contact a member of our team to learn more.

karim-mubarak-co-founder-and-managing-partner-at-sourceithr (1)

Karim Mubarak

Co-Founder & Managing Partner

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