Payroll software can either be outsourced or kept in-house. There are pros and cons to both options, but many companies prefer to keep their payroll software in-house so that they maintain more control over the system.
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What Is In-House Payroll Software?
In-house payroll software is any payroll software that enables HR or payroll staff to process payroll within the company. Your own employees are the ones processing the payroll by using payroll software that can be either on-premise or cloud-based. By contrast, outsourced payroll is when an external company processes your payroll on your behalf. No payroll software is necessarily required at your own company for outsourced payroll because an external company processes it for you.
Increased Data Security
Another advantage of keeping payroll in-house is data security. If another company is involved in running your payroll processes, they’ll be privy to at least some of your company’s payroll data. Plus, data would have to travel from your company to the outsourcing company. If data stays in-house, there are fewer points at which the data could be compromised. On top of that, with in-house payroll software, only your own employees would ever have access to secure data.
More Control Over Payroll Processes
One of the main reasons a company might choose in-house payroll software over outsourcing their payroll is to maintain full control over their payroll processes. With your payroll processing in-house, your company can work with your own payroll processes and use any software in such a way that suits your own preferences and procedures. Any company outsourcing their payroll processes may have to adapt to the external company’s methods of running payroll.
Lower Payroll Costs
Hiring another company to run your payroll processes for you can be costly. While it saves you time, this sort of service can cost more than just doing payroll in-house. For this reason, many companies prefer to keep their payroll in-house. They implement in-house payroll software in order to make running payroll more accurate, efficient, and effective. In-house payroll software can help to maintain the benefits of in-house payroll as well as some of the benefits of outsourcing. Payroll software can automate a lot of the payroll process as well as help with compliance.
Compliance Challenges
A downside to keeping payroll in-house is the compliance challenges that your company may face. Outsourcing payroll eliminates many of these challenges because the companies that specialize in running payroll processes are experts in that subject. They’ll be more familiar with laws and regulations and can help companies stay compliant. Any company with in-house payroll can use payroll software to help maintain compliance and accuracy when running payroll processes.
Time-Consuming for HR Staff
Another disadvantage of keeping payroll in-house is that it takes up more time for the employees involved. However, using in-house payroll software can help to reduce the amount of time and resources that running payroll takes. It also helps to reduce potential errors by reducing the need for manually entering payroll data.
