Industry News

Why Small Businesses Outsource Payroll

(Article is based on information available at the time it was written: 2022-04-12)

Completing the payroll process in-house is a viable option for many small businesses. But there comes a point when outsourcing your payroll becomes more beneficial for your business. Payroll companies offer many advantages that would save you time, money and headaches. 


Many payroll companies offer services that allow you to complete your payroll online. This includes entries, deposits and electronic copies of reports/stubs. There’s little to no need to have paper copies of any documents as they are all available online or through a portal. Direct deposits are also completed for each employee so there is no time wasted on writing/signing cheques. Additional time-consuming services that are often overlooked include completing T4s, ROEs and employee inquiries. T4s would be provided to each employee and a copy of the T4/T4 Summary would be sent to CRA as well. Completing ROEs can be very time-consuming but payroll companies will take care of it! The source deductions are also submitted to CRA on your behalf. Employee inquiries and requests also take up valuable time, ESS (employee self-service) portals offer employees the convenience of finding any documents they need in one simple, secure location. If employees have questions you’re unable to answer, payroll service providers will be able to assist you.


Payroll companies have many clients that have a broad variety of payroll needs. This means that payroll service providers must understand what is required of them and keep up to date with ever-changing guidelines, legislations and laws. The experience, knowledge and compliance regulations that payroll companies poses are valuable asset to have for your business.  They will ensure your reporting and payments are made within the necessary compliance thresholds. Getting assistance from qualified professionals provides you with a sense of comfort and confidence that your payroll process is being taken care of.


One of the biggest reasons a small business may choose to keep the payroll in-house is to keep costs down. A great way to put the cost into perspective is to compare it to time and effort. Undoubtedly, it will require more time and effort to complete the entire payroll process in-house than to outsource it. With outsourcing, all you would be required to do is submit the payroll hours/updates each period. If you have a designated employee to complete the payroll, you would need to enter the hours, double-check the work, make adjustments if necessary, create/save reports, provide employees with stubs and payment, remit the source deductions, complete ROEs etc. all while ensuring you are complying to the law. The question small businesses would need to ask themselves is if the additional time, effort and energy saved outweighs the cost to outsource payroll.

All of these benefits provide you with more opportunities and resources to operate and expand upon your business in a meaningful way. 

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