Outsourcing Payroll

Aided by the success of Timothy Ferriss’s book, The 4-Hour Workweek, and fueled by limited internal resources and an abundance of service providers, we have become a nation of outsourcers. It’s not hard to understand the attraction. Who wouldn’t love to hand off their least favorite chore to someone else? But when it comes to payroll, we might be kidding ourselves about both the benefits and the true costs of outsourcing. (Draw your own conclusions about that 4-hour workweek.) The promise of payroll outsourcing is that the payroll service provider will assume all of the hassle of paying employees, leaving employers free to pursue more value-added activities. This arrangement sounds like a no-brainer. In cases where the burden comes from the sheer number of payroll checks or the number of taxing authorities expecting payment, an employer might actually succeed in shifting a portion of their pain to a service provider. But in many other cases, companies who outsource end up trading one set of burdens and irritations for another. These employers encounter inflexible reporting, limited options and hidden charges, and don’t succeed in substantially reducing the demands on their staff. And what’s worse for today’s businesses, they end up having limited insight into th