Payroll Company or Payroll Service?

Do you wonder every single pay day that comes and goes whether there is a better way to complete your payroll? It seems these days that there are two schools of thought.

  1. Use a Payroll Service! Don't bother with the payroll; just outsource it to somebody else and remove the stress from yourself and your employees. Let the service be responsible for the tax reporting.
  2. Use Payroll Software! Bring the process in-house where we have more control over the whole process and paying employees. We'll save money and we will also be able to make changes as needed, instead of waiting for somebody else.

Does your way of thinking fit with one of these? When it comes to choosing between a service or software, there really is no cookie-cutter answer. You might save money with one, and the other might be more convenient. But you'll never know for sure unless you do some research and find out for yourself. Either way, these are typically the most popular considerations when trying to decide, and some important things to think about for each one.


It's amazing how many people think either a payroll service or payroll software will save them money, without even getting a price quote. The truth is, pricing for both is dependent on many things, including your number of employees, whether you need direct deposit, electronic tax filing, the number of companies you process payroll for, and more. Probably the biggest factor as far as pricing is the vendor's pricing! Pricing does vary, so it's a good idea to first narrow down your search to several systems that can meet your needs and the needs of your business. You can then get a price quote from each vendor and move on to the next step in choosing a payroll service.


In many cases, larger (or growing) companies need more control with their payroll. This could mean they need to track data by department, have special pay codes or need specific reports, or a long list of other needs growing companies have. In these cases, it can be true that more control is gained by using an in-house payroll system. However, reporting and setup capabilities do vary greatly by payroll service, with some giving far more control than others.

Tax Filing.

Knowing your taxes will be filed on time is a comfortable feeling. In fact many people claim this is the most important reason they use a payroll service. If remembering to file your taxes on time is a concern, it may be worth looking into a payroll service. On the other hand, more and more payroll software systems are building in tools to help you remember filing dates and even allow you to complete your filing online.

The bottom line is, check out all your options when it comes to payroll processing. You will never know which one is right for you until you check them out and apply it for your business.

Susie Bowman Photo The author of this article has been helping business adjust to the computer age by upgrading their accounting software for small business and payroll software programs so they can be up to speed with all the new software programs. In her free time she enjoys writing music and dancing.