What to do and NOT to do when you decide on payroll outsourcing

Payroll Outsourcing

Payroll outsourcing is a popular business process for many organizations nowadays, given it is lower cost in the long term and you can have experienced people to do the work for you instantly without the need to train. However, what do you need to do and NOT do when outsourcing your payroll?

First of all, what is payroll outsourcing? Payroll outsourcing is when a business or company allows another company or agency to manage their payroll administration and paperwork. This will be in exchange for some kind of fee per employee. Some popular payroll services in Australia include Payroll Service Australia (, Payroll Management Services and ADP.

What does outsourcing payroll offer?

Payroll services typically offer services like working out payroll and tax payments, printing and delivering paychecks and regular management reports. Depending on the business, they can send out weekly, bi-monthly or monthly paychecks and reports. Some also offer payroll software to automate and update employee benefits.

When should you consider payroll outsourcing?

It’s a good idea to consider payroll outsourcing when your company is experiencing a few changes. A business should think about payroll outsourcing for a few primary reasons: simpler payroll system, better knowledge of paying local and federal taxes and ease of mind.

What are the dos when outsourcing payroll?

  • Ensuring your intellectual property won’t be compromised when you outsource your payroll- if employees’ salaries were to be leaked, it could cause tension
  • Choose the right payroll jobs to outsource. You may prefer to skill keep some or part of the operation in-house for convenience, or because that employee is of commercial importance to the company
  • Manage the outsourcing team effectively. They have many other clients who also require their services, so being able to negotiate is a good step forward
  • Include a non-disclosure or non-complete agreement when negotiating with the outsourcing party. Check here !

What are the don’ts when outsourcing payroll?

  • Do not provide any kind of training or instruct them how to do their job, or ask them to use a particular method when performing their job
  • Do not provide the outsourcing team with work onsite, any employee benefits, a guaranteed relationship or perform work that is a vital business function


Payroll outsourcing for your business can be financially viable if researched correctly and an efficient payroll service is chosen. If you can choose wisely which part of your non-vital payroll operation can be outsourced, and understand that it is a working relationship, and be negotiable with your terms and conditions, outsourcing can prove to be profitable and time saving for you. If your business is also undergoing rapid expansion in a new territory and you are unfamiliar with the local laws and procedures, a local payroll service is worth consulting to make sure you are paying due diligence. If you consider payroll outsourcing, do be sure to compare prices and services before committing to an outsourcing company.