5 benefits of outsourcing payroll services

Published: April 23, 2021 14:06

With a growing trend towards outsourcing, payroll processing continues to be a popular outsourced function. It involves the engagement of a third-party expert to process the payments to your employees.

An outsourced payroll provider will remit payroll taxes, compulsory contributions and distribute payments on a regular schedule (as per law). They would furnish necessary documentation to the tax authorities and send regular reports to the client on the performance of the business process. When deciding on a third-party service to outsource payroll, conduct a background check on their reputation, compliance capabilities, information security record and their ability to provide allied accounting services.

There are 5 major benefits of outsourcing payroll are:


Processing payroll is a regular administrative task that demands time and attention on aligning extensive data. Ensuring compliance against timesheets, leaves and payment terms eats up valuable time, which could otherwise be utilized on crucial business operations. Where employees work in shifts or varying amounts of time, manual recording of the work hours is a tedious process.

By delegating the functions of payroll, you not only free up time but also gain the benefit of experts to handle employee queries. Any entry related mistakes and unexpected notice of an audit will all be taken care by the service provider, letting your team focus on your core operations.

Cost- effective

In-house payroll processing has a direct cost of financing the team for processing pay slips, maintaining accounting software, training staff and addressing employee queries. Employers need to be constantly updated on changes in tax rules and accounting deadlines. Missing out revised rules or crossing deadlines can be costly and would add to business liability.

In comparison outsourcing payroll does save the firm money and penalty costs on missed deadlines.

Core business focus

Payroll being a non-core business function, is not one of your revenue-generating activities.

An expert handling the processing, frees up time to concentrate on core businesses revenue centers such as sales, customer service and online marketing.

Regulatory compliance

Modern businesses operate with mixed workforce comprising of full-time, part-time and contractual employees. This requires payroll services to maintain basic pay rates, sick leaves, annual leaves, superannuation, and tax benefits for individual staff in compliance with stipulated regulations. The most intimidating tasks for small /medium size businesses is complying with labor, tax, immigration and insurance laws. The complexities increase with international operations.

When you outsource, experienced experts oversee the compliance against changing legislations and tax conditions. With vast knowledge on local and international regulations, they ensure compliance with the current rules and keep you posted on new laws or deadlines. Thus, saving your firm from heavy penalties or daunting audits triggered by non-compliance.

Risk mitigation

Working with an outsourced payroll provider means you gain advantage of their in-depth expertise to guide you on the legal jurisdictions and tax issues. With on timely guidance on taxation issues and implementation schedules, the risk for non-compliance is reduced.

Third-party services eliminate the risk of fraudulent activities such as falsification of timesheets and misallocation of funds which cost a business money. By hiring a company specialized into payroll services; a business can operate with the confidence of having reduced the risk of payroll fraud.

While some businesses continue to process payroll in-house, many of them have realized the benefits of outsourcing it to a specialist accounting service organization. If you are convinced that delegating your payroll functions can benefit your business, kindly contact our accounting professionals at Qadi on 971 4 3298344 or send an email to


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