Managing payroll is one of the most critical responsibilities for any small business—but it’s also one of the most time-consuming and complex. Between calculating wages, withholding taxes, staying on top of ever-changing regulations, and filing the correct forms, payroll can quickly turn into a full-time job. As 2025 introduces new compliance updates and digital filing expectations, small business owners are asking: should we continue handling payroll in-house, or is it time to outsource?
There’s no one-size-fits-all answer, but understanding the true cost—both financial and operational—can help you decide what’s right for your business.
Doing payroll in-house may seem like the most cost-effective option at first. After all, if you’re already using accounting software or managing it yourself, why add another expense? But this approach often underestimates the time and risk involved. Small business owners and internal staff typically spend several hours each pay period preparing checks, calculating withholdings, and ensuring accuracy. Mistakes can lead to penalties, frustrated employees, and time-consuming corrections. As tax rules evolve and states add new requirements for digital reporting, the margin for error shrinks even further.
The IRS reports millions in payroll tax penalties each year, often due to missed deadlines or incorrect filings. If your team lacks in-depth tax knowledge, staying compliant becomes a risky endeavor. You can view recent IRS statistics on payroll penalties here. For many small businesses, these mistakes can be more expensive than the cost of outsourcing altogether.
Outsourcing payroll, on the other hand, offers a streamlined, accurate, and cost-efficient alternative. Partnering with a provider like Haworth & Company means you’re getting payroll compliance services backed by experts who stay current with tax laws and filing deadlines. Instead of worrying about quarterly tax submissions, W-2 generation, or benefit deductions, you get a hands-off solution that saves time and reduces stress.
While outsourcing does come with a monthly or per-payroll cost, the value lies in what you save—both in hours and in risk. Your team can focus on growth and operations rather than spreadsheets and state portals. Haworth & Company’s affordable payroll accounting solutions are built specifically for small businesses, with customizable options that fit a wide range of industries and workforce sizes.
Another factor to consider is flexibility. As your business grows or fluctuates, so do your payroll needs. New hires, terminations, bonuses, and benefits all add complexity to your process. An internal system might be sufficient with five employees—but what about fifteen? With small business payroll solutions from Haworth & Company, you can scale without adding administrative burden.
For many businesses, mid-year is a perfect time to reassess. A mid-year financial review for small businesses helps identify inefficiencies and hidden costs in your current payroll process. It’s also an opportunity to review compliance, plan for year-end filings, and correct issues before they grow. Many business owners find that by the time they account for payroll software fees, tax penalties, and staff hours, outsourcing would have saved them both time and money from the start.
Whether you’re still doing payroll manually or using basic software, ask yourself: are we compliant with all tax requirements? Are we confident in our reporting accuracy? Are we using time wisely, or could that time be better spent serving customers or growing the business?
As 2025 unfolds, tax compliance for small businesses will only become more essential. Regulations around employee classification, digital filing, and benefits tracking are changing fast. Outsourcing with a trusted partner like Haworth & Company ensures you’re not only keeping up—but staying ahead.
Making the right payroll decision isn’t just about cost. It’s about confidence, compliance, and reclaiming your time. To explore how Haworth & Company can support your business, visit haworthco.com or contact us today for a personalized consultation.
