7 Common Misconceptions About Payroll

A payroll outsourcing firm takes away the payroll burden from you. They insulate the process with expertise, cut-down costs, and nullify the risk of errors and non-compliance.

You cannot afford to go wrong with payroll. 


For starters, the cost of mismanaged payroll begins with harsh fines and penalties and ultimately leads to ruining the entire business.  

  • As per research payroll problems affect 54% of the workforce.
  • 40% of SME owners believe that managing payroll and related taxes are the worst and most time-consuming part of owning a business.

The issue, however, is not payroll but the misconceptions hovering around it that create problems and harm businesses.

Here are 7 payroll misconceptions and truths behind them

Third Party Payroll Services

Payroll is a one-time effort

This cannot be farther from the truth. Setting up a framework for payroll is a continuous process —  it doesn’t end with setting up payroll software. 

The process needs regular evaluation and periodic updates. And that’s precisely how you maximize its efficiency.

  • You need to continuously eliminate repetitive tasks, find error-prone areas, and identify time-consuming parts using payroll software. 
  • Changes in the work atmosphere, compliance standards, and technological developments also contribute towards making payroll an ongoing process.

Remember to frequently audit your payroll software and the entire process.

Payroll = salary calculation

Payroll is often misconstrued as a process of paying employees for their work jobs. The reality, however, is different. 

  • Payroll cannot exclusively fit under HR. It involves accounting procedures too. 
  • The payroll process involves salary calculation as per the leave policy but that’s just a part of it. It also deals with time and attendance, deducting TDS and contribution for PF, ESI, PT, & all that’s applicable.

Payroll is thus much more than salary calculation.

Anyone from the HR/Finance department can process payroll

Payroll deals with highly confidential employee data so it mustn’t be handled by just about anyone. 

  • Assign payroll responsibly to experts who have the necessary skills. 
  • Make sure they know to handle sensitive information besides knowing about taxations and its statutory aspects. 
  • Always have a confidentiality agreement in place to maintain the security of your payroll data. 

All about tax

  • Taxation is easier to handle in-house.

Companies that outsource the entire payroll process often handle taxation in-house to save costs. However, by not handing over the process to experts, they end up increasing the cost manifold through non-compliance and heavy penalties.

  • Payroll doesn’t involve employee taxes.

This is misleading. Employers must fairly withhold payroll taxes from employee’s gross salaries. The payroll team then —  on behalf of the employees — pays it to the government.

Payroll doesn’t involve strategy

That’s a lie. 

Payroll doesn’t comprise transactions alone. There are various strategic activities that go into making an efficient payroll process. 

  • Payroll components are thoroughly reviewed to ensure that your payroll synchronizes with the industry standards, benefits employees, and gives you a competitive edge.
  • Ensure that your payroll and organizational goals are on the same lines.

Payroll has no role in retaining the employees and enhancing their experience 

Employees have both monetary and non-monetary motivating factors. And both affect their experience. 

An efficient payroll system with accurate payments, payslips issuance, ESS portals increases employee’s trust in the organization. This inculcates a transparent culture, reduces employee turnover, and enhances their experience.

Outsourcing Payroll outsourcing is not worth it

A common misconception is that it is easier and cheaper to handle payroll in-house. 

Reality – Here are the ingredients to handle payroll in-house 

You’ll need 

  • Time and money to upgrade and maintain your payroll software.
  • An in-house IT team.
  • IT Hardware support, time and again. 
  • Extra time and cost to train employees, for payroll administration and taxation, and to keep up with the compliances.
  • High risk of errors and non-compliant procedures.
  • Cost of fines and penalties if you go wrong.

Does it look like it’s easier or cheaper to deal with the aforementioned?

The truth is, a payroll outsourcing firm takes away the payroll burden from you. They insulate the process with expertise, cut-down costs, and nullify the risk of errors and non-compliance. 


Now you know the common misconceptions that trap you and ruin your business. The next step is to understand their corresponding truths and take one step at a time to eliminate them by leveraging the latest processes and technologies.

1 Star2 Stars3 Stars4 Stars5 Stars (No Ratings Yet)

Post a Comment

Your email address will not be published. Required fields are marked *

Related Posts

Need for Digitalization in Temp Staffing

Need for Digitalization in Temp Staffing

Rishabh Ranjan Nov 21, 2020 9:32 AM

6 reasons why you need Digitalization in Temporary Staffing Brand presence One way to let your presence known widely is through digitalization. All the social…

Contractual Staffing 101: Why Third-Party Payroll Services Is a Win for Employers

Contractual Staffing 101: Why Third-Party Payroll Services Is a Win for Employers

Rishabh Ranjan Nov 21, 2020 7:05 AM

As your business grows year-after-year, so will your employee strength. In such a scenario, it’s best to reach out to a contractual staffing firm offering third-party…

Why Recruitment & Staffing Agencies Need Efficient RMS

Why Recruitment & Staffing Agencies Need Efficient RMS

Shalini L Nov 11, 2020 2:36 PM

Every business needs a recruitment process to bring in new employees, as and when required. Some companies have a dedicated HR department to oversee this…

All About Staffing

All About Staffing

Rishabh Ranjan Nov 11, 2020 10:10 AM

Choosing people to fill positions in the establishment plan/staffing is a very important step. Staff mistakes can also easily lead to higher costs and delays…

The 7 Most-Common Recruitment Models in IT Staffing

The 7 Most-Common Recruitment Models in IT Staffing

Shalini L Nov 11, 2020 8:39 AM

Regardless of business size, hiring the right employees is a crucial task. For hiring managers, it could be difficult to choose the best person for…

Subscribe For Newsletter

Subscribe to get the latest news and happenings around recruitment space

Please hold while we process the request.