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Payroll Software vs. Full Service Payroll Company - What is best for you?

Brief Comparison of Software vs. Full Service

OK, we are a bit biased towards full service instead of software.  Payroll services offer more services, peace of mind and usually cost less than buying software.  

Small and midsized companies are always looking for ways to streamline operations, improve efficiency and get the most out of their overhead dollars. One area where there are a couple of options worth researching is within the back office payroll function. Many owners and managers spend far too much time managing this process, when they could be focusing their efforts on more important things like setting goals and growing their business. Therefore we thought we would help you along by providing some of the pros and cons of each option.

Full Service Payroll Company

Pros:  

While it can vary depending on the size of your company and the hours spent on managing payroll in-house, this is likely going to be a cost-saving endeavor. Having an outside company process your payroll for a fee allows you to budget accordingly and free up any extra dollars to other areas of your business.

Using a payroll services provider ensures that you will be keeping up with any regulation changes (which there are plenty of in 2011 and 2012).

Monthly and quarterly employment tax reports are managed and submitted correctly and on time. This can be a huge relief to owners who are not accountants.

Direct Deposit, electronic filing services and GL integration with your accounting software

Cons:

There can sometimes be a difference between what you expect them to provide, and what you actually get. Be sure that you do your homework before choosing a company to handle your payroll for you.

Costs can vary therefore keep in mind that some payroll services charge extra for everything. Large national firms are not often the best choice for small and medium sized companies.

Not all payroll companies offer free direct deposit, some impound your taxes, some require you to input your payroll 4 days in advance

Payroll Software

Pros:

Payroll software can automate your payroll process, making it more efficient and easier to manage than doing it manually.

Your data is in your hands on a local computer

Cons:

This will likely require an investment up front.

Some software can be difficult to learn - so be sure to test it out first to see if it was designed with the end-user in mind.

You may have to continue to invest in the software as upgrades become available.

Security, you are fully responsible for backing up your software and data. A computer crash or theft can wipe out all of your data.