But payroll is a vital function and it must be done on an ongoing, timely basis, and it must be done accurately. Most business owners know they could easily engage the assistance of a payroll services vendor, but they don't have a clear understanding about the logistics and costs involved in having their payroll outsourced.

There are a number of reasons why businesses will turn to a service to handle their payroll, and while the various reasons are all important, they will vary considerably from one company to another. Below is a compilation of the most common reasons given for payroll outsourcing. They are not presented in any particular order, as the importance will depend upon the circumstances within a specific organization.

In most cases, large companies tend to have their own payroll departments, but the cost to have such an operation is prohibitive for smaller companies. Usually, a company that has fewer than 20 employees will find that outsourcing these duties to a payroll services vendor will end up saving them both money and numerous headaches.

Productivity is another key reason for many smaller to mid-size companies to turn to outside services to handle their payroll needs. By removing the burden of the payroll task from employees, they are able to turn their attention to more productive and profitable endeavors once the payroll services take over the work. In some cases, this even means that staff can be trimmed or reassigned.

Payroll simply must be accurate. Mistakes made when dealing with people's wages and salaries can be detrimental and result in employee discontent. Even worse, there are penalties to deal with if mistakes are made in calculating the funds that must to paid to the government. As experts in the area, payroll services providers are much less likely to make serious errors and if they do, a company can seek out financial restitution from the outsourcing services provider.

Speed and flexibility are two other common reasons why many companies turn over their payroll to dedicated payroll services. The companies that specialize in handling payroll functions have considerable technical resources available and they can process even very complicated payroll tasks quickly and efficiently. These outsourced managed services also can easily handle temporary influxes of seasonal employees, which is often a challenge for an in-house payroll department.

A quality payroll services company will also have a great deal of expertise, as well as insights to bring to the table. They generally have experts on staff that know and keep up on all of the "ins" and "outs" of tax laws, as they relate to payroll issues. The training required to gain that level of expertise and working knowledge is often prohibitive for the payroll clerk of a small business.

As well, security and peace of mind are two other big benefits that a small business owner can enjoy if they decide to outsource to payroll services providers. Most small companies don't have the resources to closely supervise the payroll process in order to deter abuse and possible shady activities. And, knowing that the payroll is being handled by professionals allows a business owner to relax and simply focus on business growth and opportunities.