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Should You Use a Payroll-Only Provider?

Should You Use a Payroll-Only Provider?

Your company's growth and profitability could be at risk if you're not using the right partners. Getting the most bang for your buck is important whether you hire a new employee or use a new vendor. Payroll is no different and HR outsourcing may offer you a solution. 

Beyond price, you may also look at specific job duties. Some HR tasks are routine and can be outsourced to a third party to free up your internal HR team, giving them time to focus on your core business needs. One such task is payroll processing.

Using a payroll processor may make sense for your business, depending on the HR outsourcing pricing model. However, working with a vendor that only provides your company with one task can create issues if you need support in other areas. Finding the optimal mix between service and costs is vital to your company getting the best ROI.

The Problem with Payroll Provider Services

Payroll processing providers only give your company payroll help. While important, payroll represents just a small portion of the work your HR team handles. Payroll provider services do help with your payroll but that's where the benefits end.

Negative ROI

When your company only gets help in just payroll, your ROI is bound to be negative. If you need assistance with any other HR tasks outside of payroll, you will need to absorb the expense of either hiring another in-house HR employee or another HR outsourcing company. The advantages of outsourcing payroll alone simply isn't worth it.


It might seem like this is a positive because a payroll provider will save your existing HR employees the time of doing payroll. But your internal team will still need to review and remit payroll taxes. In this way, the amount it costs to get the service for the little time saved rarely makes sense.


Many payroll providers are very small businesses that are not financially stable. You may not have a way to run your next payroll, leaving you scrambling to find a replacement provider or to try to do payroll in-house. Leaving your company exposed like this can create a ripple effect of financial problems and employee loyalty issues. Missing just one paycheck will make most employees look for a new job.

The Problem with Payroll Provider Pricing

Payroll processing companies make money by charging a percentage of your payroll as their fee for doing the work. The higher your payroll, the higher your fee. This fee structure means that giving your employees raises or hiring new employees means that you have additional costs to each of those business decisions. This could result in fewer raises, making employees less loyal to your organization and more likely to leave for a better offer.

The Solution is Professional Employer Organizations

Professional Employer Organizations (PEO) may be just the solution you need. A PEO provides your company with much more than payroll processing services.

PEOs complement your in-house HR team by taking on the mundane and repetitive tasks that your internal will gladly shed. This frees up your employees to focus on building a strong culture, providing best-in-class benefits, and helping your business grow.

Getting access to all of these additional services from your PEO means that you do not have to hire a new internal HR employee or locate a new HR outsourcing partner every time you have a new HR need. You simply work with your PEO to provide you with the exact services you need, when you need them. This can save your business not only headaches but money. The average ROI of working with a PEO is 27.2%.

Find the Right PEO for You

If a payroll provider only offers one service, they are inferior to a PEO that offers you a comprehensive suite of HR services. From payroll and tax remittance to onboarding and employment law compliance, a PEO gives you access to nearly everything HR-related.

Spending your company's precious resources on a provider that does just one task may seem like a simple solution. But when you boil it down, you can get more service from trained and specialized HR experts with a PEO. 

To get a positive ROI, partner with a PEO who gives you the best service at competitive prices and a stable, consistent environment.

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Payroll Management & Administration