Posted on November 5, 2020

Payroll is a significant company expense subject to various laws and regulations and thus every business owner must ensure that the payroll process is accurate and reliable. Employees need to be able to rely on being paid the correct and agreed amount consistently. Payroll affects every aspect of a business from the morale of employees to the financial stability of the company vis-a-vis operating expenditure and cashflow management.

Whether you have one employee or hundreds, you must follow the appropriate procedures that go into paying them. However, your job as a business owner is to provide strategic direction in the running of your business, not to be dragged into payroll processing, so we think it your best strategic choice is to outsource payroll processing – that way, you hand it to professionals who neither overpay or underpay, or forget to remit a statutory deduction, as well as who you need not supervise.

When you outsource, you have an entire organisation’s resources tending to your needs.
Outsourcing the payroll process saves time. Businesses of all shapes and sizes are outsourcing payroll processes to the expertise offered by experienced payroll teams and/or software. Employment regulations, data and compliance requirements and tax regulations are quite complex, and change from time to time.

Many payroll service providers calculate payroll taxes, manage filings and payments and will assume the cost of penalties due to incorrect calculations or late payments so long as you provide the necessary information and funds on time. They take the risk off you.

Outsourcing payroll operations is cost efficient: The direct costs of processing payroll can be greatly reduced by working with a payroll provider. Big businesses can afford to maintain robust payroll departments. However, Small/medium sized businesses, having an in-house payroll processor is simply a waste of resources.

If your business has fewer than 30 employees, there’s a very good chance that you can save money by outsourcing your payroll operations. If you try to do the math: Figure out how many labor hours your employees are devoting to payroll-related activities, (Calculating payroll each time period, printing, signing, and distributing paychecks or pay stubs, computer software and program maintenance, training and support, keeping up with changes in tax rates/laws, preparing and remitting payroll taxes and returns to government agencies. It can be very expensive.

Outsourcing payroll helps to avoid IRS penalties or mistakes: For business owners, payroll operations to the professionals reduces the chances of a mistake being made in areas which could result in penalties and fines. According to the Federal Inland Revenue Service, 40% of small businesses pay an average penalty of NGN 25,000 for the first month. Keeping alongside state, federal, local and industry-specific regulation changes can be an arduous task. Payroll service providers have a team dedicated to keeping up with all of the changes in regulations because they require that knowledge to service multiple clients. It is simply a matter of economies of scale.

Outsourcing Payroll improves data security: The fact is that in-house payroll comes with inherent risks, including embezzlement and identity theft. Even if you are assured that your payroll software is secure, you cannot always guarantee the safety of the servers and network.

Quality outsourced payroll providers store and protect data with highly secure cloud-based servers and make use of cutting-edge technology to ensure the integrity of information is not compromised. And if you’re a peace hoarder, just know that outsourcing your payroll as a business owner will add to your peace of mind, you can save time and resources by leaving the payroll processing to the professionals while you focus on running your business more effectively.

Outsourcing payroll to a professional service provider can help your business stay focused on what matters: generating more business. It is simply a lean approach and is thinking ahead!
Our Outsourcing Programme, which covers either or a combination of HR, IT, CRM, Secretarial Services, Tax Compliance & Accounting is run under our SME Faculty. For more information on our Outsourcing Tech Support, send an email to

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