Payroll – Should You Outsource?Written on October 1, 2026 by Kirk Rice LLP
The Question:
I am a business owner who employs 11 members of staff. Since I took on my first employee three years ago I have run the company payroll myself. I am finding the task more arduous each month and I am increasingly worried about making mistakes. I have heard that some businesses outsource their payroll function. What exactly does this mean and is this a good idea?
Kirk Rice LLP answers:
Payroll outsourcing means that businesses choose to hire a specialist external company to handle their payroll function to save them time and money, gain efficiencies and ensure compliance.
There are many benefits of payroll outsourcing including:
Time saving
If you handle it in-house, you know that it requires a lot of time and attention to detail and that demand on your time increases as your staff grows. That’s time taken away from the core tasks that help you manage and grow your business. When you outsource your payroll, you immediately free up all that time. You can devote that free time to refining sales and marketing strategies and improving workflow efficiencies.
Reduced overhead costs
As a business owner, your time has a value that’s linked to the revenue you generate. Any time you can save each day is money earned. With that in mind, think about all the time you spend on payroll tasks every pay period. If you compare the total time you spend on payroll each pay period to the costs of outsourcing, you’ll see a great deal of cost savings when you take those tasks off your plate.
Data security
Managing your payroll in-house can come with data security risk. The door is wide open for identity theft. Aside from these employee risks, you’ll need to consider the security of your payroll software. While the software itself could be relatively secure, you may house your data on a server or network with security flaws, that could leave you open to data theft.
Comparatively, outsourcing your payroll typically means your data is stored on highly secure servers as a standard part of the service.
Compliance
Regulations change constantly, often many times throughout the year, so it’s unlikely that you can stay on top of all these changes when your focus is to run and grow your business.
Payroll mistakes are a very real possibility and can leave you open to HM Revenue & Customs enquiries and potentially costly penalties. Even though you’re not an expert in the complicated realm of tax regulations, doesn’t mean that you aren’t responsible for mistakes. You’re still legally responsible for any failure to file accurately with HM Revenue & Customs.
Payroll firms understand payroll regulations. It’s their job to keep up with the rules, regulations, and changes in tax law. They guarantee accuracy and compliance.
Access to a variety of services
When choosing a payroll provider, it is also important to consider what additional value-added services can be provided by the organisation. Aside from the standard payroll service it can be an enormous benefit to have access to HR advisors, tax specialists and financial advisors within the same organisation.
You can save yourself a lot of time, money, and headaches when you outsource your payroll, so you can get back to growing your business.
If you would like to find out more about outsourcing your payroll, please contact our team at info@kirkrice.co.uk.
Please note: This article was correct at the time of publication. It is intended for general information only and should not be relied upon as professional advice. Specific advice should always be obtained based on your individual circumstances.
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