QuickBooks or Payroll Outsourcing: Which Is the Right Choice for Your Business? 

I’m no stranger to tackling minor plumbing or car issues with the confidence that YouTube can guide me through it. (Toilet mishaps are a different story—I’ve learned that the hard way…) The allure of self-sufficiency is strong, but more often than not, my expectations of a quick fix transform into hours of frustration. My ambitions to be a mechanic, plumber, or electrician usually end with me calling a true professional. At least I tried! I’ve accepted that handiwork isn’t my forte, and it’s better to bring in someone skilled – or at least claims to be (cue my grandfather’s charming but questionable skills). 

When you’re responsible for paying your employees and their livelihood depends on it, there’s no room for error in the payroll process. Making mistakes not only erodes trust between you and your employees, potentially driving them to seek other opportunities, but it can also attract unwanted attention from Uncle Sam. Fortunately, in today’s world, there are numerous resources and companies available to help streamline your workforce management. 

QuickBooks has emerged as a leading accounting and bookkeeping software for small businesses, offering a range of products and services that integrate with your back-office operations, including QuickBooks Payroll. In this article, we’ll explore the choice between QuickBooks Payroll and outsourcing your payroll to a third-party firm in hopes that it can help you decide which option best suits your needs. 

Pricing  

When evaluating your tech stack and the services you rely on, cost is a critical factor that can significantly impact your bottom line. From the perspective of an outsourced payroll provider, QuickBooks often emerges as a cost-effective option on a year-to-year basis. They offer three main packages tailored to your business’s unique needs, with prices starting as low as $37-70 per month. 

Outsourced payroll vendors employ a variety of pricing models. Some calculate costs based on a per-employee-per-month (PEPM) structure, while others may charge per payroll processing run. It’s important to carefully consider the fees associated with your specific payroll schedule to gain a clear understanding of your anticipated annual expenses. Explore this article for a comprehensive dive into these pricing structures. 

As you assess different providers, don’t just focus on the cost of services you require at the moment. Plan for the future as your business expands. Ask yourself whether you intend to offer benefits like a 401k plan or health insurance, or if you’ll need to incorporate components for Affordable Care Act (ACA) compliance. Ensuring that your chosen payroll solution can accommodate your evolving needs is crucial for long-term financial planning and business growth. 

Pros of QuickBooks Payroll 

QuickBooks Payroll stands out as an excellent choice for small business owners, providing a powerful tool that empowers employers to efficiently manage their employee payroll. One of its most compelling advantages is the budget-friendly pricing it offers, making it an accessible option for businesses of various sizes.

QuickBooks Payroll also comes equipped with essential function add-ons that cater to the needs of many small business owners. Moreover, if you’re already using QuickBooks’ bookkeeping and accounting software, the seamless integration of your payroll data into your financial records is a major time-saver and an invaluable asset. 

Cons of QuickBooks Payroll 

As with any new software added to your tech stack, there’s always a learning curve to consider. QuickBooks does provide helpful resources on how to operate their program, but depending on the level of package you choose, you may not receive direct expert guidance. Your comfort with compliance and your familiarity with the software will dictate the extent of time investment required to grasp its intricacies. 

The major drawback of QuickBooks Payroll is it’s a Do-It-Yourself system. At Whirks, we cut our employers’ checks, deliver them, and handle their taxes for them. QuickBooks Payroll is essentially a tool to help you calculate your tax payments, but it doesn’t handle new hire reporting, wage garnishments, printing checks, and filing taxes.

Think of it like the difference between building your kitchen cabinets and having someone install them for you. You can either purchase the tools needed to make and install your cabinets (QuickBooks) or pay someone to install them for you (outsourcing). QuickBooks Payroll still relies on manual data entry, which can increase the risk of human errors creeping in. As you consider whether or not QuickBooks Payroll is right for you, be mindful of these potential drawbacks and weigh them against the software’s benefits when considering its implementation in your business. 

Pros of Outsourcing  

When you opt for an outsourced payroll agency, a significant advantage is that much of the compliance burden is transferred to the provider. They assume responsibilities such as tax filing, reporting new hires, and managing garnishments and child support notices. Depending on their customer service model, many outsourced agencies will also provide a dedicated support representative who can guide you through the software and offer assistance whenever issues arise. 

Cons of Outsourcing  

While outsourcing can bring convenience, it’s essential to consider its downsides. In general, working with an outsourced payroll company can lead to an increase in your annual expenses. Understanding your budget and ensuring the company you choose is transparent about the various fees they charge on top of the monthly cost is crucial.

Additionally, there’s a level of internal control that you relinquish when using an outsourced payroll firm. Most payroll firms will require them to handle tasks like filing your local and quarterly taxes, as well as managing year-end W-2 forms. Trust in the company you partner with is crucial since they will effectively become your reporting agent and handle critical financial matters on your behalf. 

Simplifying Your Payroll 

Payroll can appear deceptively simple: hours multiplied by the pay rate, minus deductions and taxes. However, it’s important to consider your level of comfort with compliance and taxes, as well as the complexity of your payroll process, when deciding how to handle it.  

As we said before, think of QuickBooks as providing you with the tools and materials needed to build and install your own kitchen cabinets. You’re being handed a set of saws, drills, and a stack of wooden boards with a manual on how to put it all together. You have the freedom to design your cabinets the way you want and have complete control over the entire process. However, the responsibility for measuring, cutting, and assembling falls squarely on your shoulders. If something goes wrong, it’s up to you to troubleshoot and correct the issues. 

On the other hand, outsourcing your payroll is like hiring a professional cabinet maker to install your cabinets for you. You provide them with your preferences and specifications, and they take care of the rest. They come with the expertise, experience, and all the necessary tools to ensure your cabinets are expertly crafted and seamlessly installed. You don’t have to worry about measurements, sawing, or assembling – it’s all taken care of by experts who have done it countless times. 

Making the Right Decision for Your Business 

Ultimately, the decision rests on whether you prioritize hands-on control or the ease and expertise that outsourcing delivers. It’s also important to factor in your business’s trajectory. Consider where you want to go and where you’ll be. If your business is on a growth trajectory with plans to hire more employees, it’s wise to explore outsourced vendors.

As your employee count grows, so does the complexity and responsibility of payroll management. While this growth is a positive sign for your business, an outsourced agency can serve as a valuable partner, ensuring you can focus on what matters most: the continued growth and success of your business. 

Want to find out if Whirks is the right payroll partner for your business? Click here to learn more about our pricing structure, or schedule a “get-to-know-you” call to learn more about what we do and how we can help you build a better back office.