In-house Vs Outsource: Which Is Best For Payroll Management?

In-house Vs Outsource: Which Is Best For Payroll Management?

Payroll management is a critical part of any business. By ensuring that employees – who serve as its backbone – get timely and accurate payment for their efforts, business owners can keep up their teams’ productivity levels and should thus be a priority. When it comes to payroll management, there are generally two options available: doing it in-house or outsourcing it. The latter may seem risky for new business owners due to their lack of experience with it and limited capital. However, one should not discount outsourcing something as important as payroll management just as quickly as it comes with the benefits that make it more ideal in many situations.

Read on as we uncover the differences and details between in-house and outsourced payroll management so you can choose which is best for your business.

How in-house and outsourced payroll differ

Many businesses use their organisational structure to base their payroll structure, distributing payroll bi-weekly or monthly. It is the usual option for larger companies with the manpower and resources to dedicate a team specifically for the task. The in-house Human Resource (HR) or finance department generally takes care of this process.

However, the same cannot be said for small businesses that may not always have the means to get the manpower and resources for a dedicated payroll office. Without one, though, such companies may have difficulty staying on top of their annual tax laws, compliances, and codes. Thus, to support their team, getting outside help in payroll management may be necessary and the best solution available.

In short, the main difference between in-house and outsourced payroll management is that the former is taken care of by a dedicated team of professionals under your roof, while the latter involves a third party handling the work.

How does in-house payroll management work?

In-house payroll management is essentially the combination of a payroll processing team and the accounting tools they need, such as an online system that tracks working and vacation days and a payroll schedule.

The biggest advantage of having payroll done in-house is that it allows business owners to develop their own unique system based on their needs and preferences. Besides flexibility, in-house payroll systems could be cheaper than outsourcing and come with less risk of data breaches. In-house payroll management has its drawbacks, too, starting with taking up valuable work hours and manpower. Furthermore, an in-house solution requires technical expertise to set up and maintain and may not be able to fully integrate with the business’s other solutions in use.

How does outsourced payroll management work?

Outsourced payroll management pushes the responsibility and brunt of the work to a trusted and reliable third party on a contractual basis. Under this obligation, they work automatically to manage your company’s payroll based on the data you provide.

The main benefit of outsourcing payroll is its easy and seamless process that does not take a toll on your workforce or other business resources. Compared to an in-house payroll solution, it is simple to set up an effective outsourced payroll system since the companies hired are specifically designed to follow this process. The straightforward and streamlined procedure enables various integrations of HR functions such as schedule, benefit structures, bonuses, and vacation days. These outsourcing companies know just how a priority payroll is, and so they guarantee to perfectly fulfil their obligation and send out accurate and timely payroll with no inaccuracies or delays in paychecks.

Partnering with a corporate service provider that offers payroll management takes the burden off your shoulders, especially the important ones that deal in compliance with tax laws.

Why outsourcing may be better than in-house for SMEs

For many small businesses, outsourcing their payroll management can be highly advantageous. End-to-end outsourced payroll management services can help your business:

  • Payroll services scale with your business and eliminate the obstacles that may hinder your continued growth. Save on company time and cost as businesses no longer have to allocate resources for training, technology and software, hire specialised employees to handle the work, and keep up with changing tax requirements, deposits, withholdings, and more. In addition, as a business grows, more time is spent navigating payroll for each period.
  • Reduce compliance risk as the outsourcing provider will be the one to tackle and handle all wage laws, filing deadlines, tax regulations, and any other compliance regulations relevant to your business.
  • Ensure employees are paid accurately and on time so that your business operations can continue as smoothly as possible and you can focus on your next innovation.


The livelihood of your employees is something that should not be taken lightly. Moreover, inaccuracies in payroll calculations will lead to ill-will and unnecessary stress among your team and incur unwanted and costly fees. As such, it is always recommended to hire experts when it comes to accounting and payroll, and outsourcing is the quickest and most cost-effective option new businesses can try.

If your business needs trusted, reliable, and comprehensive accounting services, look no further than OneStop Professional Services, a renowned accounting and audit company, providing suitable and valuable corporate services including but not limited to accounting and bookkeeping, taxation, financial auditing, company incorporation, and company secretary services in Singapore. To learn more about how our services can help increase your company’s growth, do not hesitate to contact us at any time.