Company Payroll vs. Third-Party Payroll

Table of Contents:

• Difference Between Company Payroll and Third-party Payroll
• What Is Company Payroll?
• Advantages Of Company Payroll
• What Is Third-Party Payroll?
• Advantages Of 3rd Party Payroll
• Differences Between Company Payroll And Third Party Payroll
• When Should You Use Third Party Payroll? .
• Conclusion 
• FAQs

Understanding what makes company and third-party payroll distinct and unique can help your company's operations and employee satisfaction see improvements. While one provides greater control, the other lowers internal HR work and stress.

In this blog, we provide insight on both options to help business owners make productive decisions aligning with their needs

What is Company Payroll?

When companies manage all compensation from within the company, it is called company payroll. The organisation has an HR and payroll team working together to complete the task.

As an internal task, it's the most popular way of payroll administration, particularly among larger companies with a large workforce. Many business owners feel comfortable with the information staying in the company and being under its control.

Advantages of Company Payroll

If you're questioning this compensation option, here's why it's chosen by many.  

• Better Control & Clarity

Doing payroll in-house gives companies a clear sight of all actions, including payroll calculations, allowing instant problem-solving.

• Information Security

The information stays in the company without any chance of leaving the office. It helps the company distance itself from issues and gives employees peace and security.

• Assured Of Compliance

Staying on the right side of the law is a concern for all companies, big or small. When remuneration is company-controlled, they can monitor and follow payroll regulations.

• Customisation

Companies can make a system suiting their salary, tax, and other needs.

What is Third-Party Payroll

Third-party payroll is another option for firms that don't want the stress and work of managing their employees' compensation and taxes. It involves giving the job to someone with years or decades of experience and knowledge.

It's not a new idea, and organisations have been partnering with payroll processing companies for a long time! These companies have the staff and software to carry out compensation and tax calculations easily.

Advantages of 3rd-Party Payroll

Are you unsure about letting go of such a vital task and information? Perhaps these advantages will change your mind for the better.

• Saves Resources

You will be amazed at how well third-party payroll services do to save valuable resources like time and money! You can use it in other areas to grow or improve your firm.

• Provides Access to Skilled Staff & Software

These agencies have teams of taxation, salary, and software experts. It ensures they can deliver correct payroll processing, with or without their specialised software.

• Reduces Errors

The provider of these services checks and double-checks and even uses software to find and correct mistakes. The final result from payroll providers is correct calculations and deductions free of errors.

• Frees Up Internal Staff

When you hire another firm for compensation and related calculations, internal staff can continue other work. It gives HR and business owners confidence, knowing experts are handling payroll administration.

How Company Payroll and Third Party Differ

There are fair points that put these two options on different ends of the spectrum, and we've summarised them in a table. 

When Should You Use Third-Party Payroll? 

• Organisations lean toward this option to lower spending, improve operations, and focus on other vital business areas. It will suit these cases best:
• Startups or small businesses without an HR department can benefit from this option as a payroll solution.
• Any firm looking to save time and money while freeing staff should look for a partner for outsourcing.
• Businesses that cannot keep up with the rules can get help from payroll companies.

Handling these calculations creates much work, which can stress and burden the HR team. Removing all this work allows them to give their full attention to other work and reduces mistakes.

Conclusion

The choice between company-controlled or 3rd party payroll is simple if you know what your organisation needs.

• The first option allows you to oversee and control the process.
• The second payroll solution saves resources, increases accuracy, and eliminates specialised staff or software needs.

If you're considering these options, you need to optimise your payroll process. You can contact us for top payroll services in India that simplify payroll operations.

FAQs

What is the difference between payroll and on-roll?

On-roll refers to people already part of a payroll processing system. Payroll is all the actions that go into paying an employee correctly and on time.

Which payroll option is more cost-effective for my business?

The option that is better for businesses depends on their needs regarding salaries and taxation. All companies find third-party payroll helps them save money and other resources better than an in-house process. 

Are there any financial risks in choosing third-party payroll over company payroll?

If the third payroll service provider is not sound, experienced, and established there are a few risks such as the security of the data and the provider's ability to follow regulations and ensure complete payroll management. Apart from this, businesses shouldn't worry about choosing this option over the other one.