What is in-house payroll processing?

If you’re reading this, you may be interested in making the switch to in-house payroll processing. Processing your payroll in-house is awesome for many reasons, but one of the main reasons why organizations choose to go in-house is to gain control over their processes, money, and time. With the right payroll system and a minor learning curve, your company can thrive by going in-house!

What is in-house payroll?

Essentially, in-house payroll is when an internal payroll team processes payroll for the entire organization. This means your organization’s payroll team would handle all steps of the process – from preparing and double-checking remittances to submitting them. In-house payroll processing provides control, peace of mind, and the flexibility teams need to make timely changes and better decisions.

The benefits of in-house payroll

One of the major benefits of in-house payroll processing is that you have greater control over the entire payroll process. You can create your own workflows, make last-minute changes, and resolve issues much faster than waiting to get a response from an outsourced provider. Depending on your company size and complexity, in-house payroll can offer many benefits to organizations:

Cost savings

Payroll represents a significant chunk of your organization’s costs, and sometimes you may need to retain payroll funds longer than your payroll provider allows.

Outsourced providers have a great reason for requiring an advanced payment from your organization – it lines their pockets, helping them make hundreds of millions off of your employee’s salaries. The interest attached to your cash flow is valuable, so when you choose to outsource, you are also choosing to miss out on earning interest until payday, and instead, that money ends up in your payroll provider’s pocket. Rigidly imposed payroll cycles interrupt your cash flow, and even when it doesn’t, it still requires forgoing interest. As a result, this ties up company funds that could be deployed elsewhere, such as purchasing inventory or other capital investments.

Outsourcing your payroll also means paying extra charges. While an in-house system allows for free and easy adjustments, fixing mistakes with outsourced providers can cost between $500-$2500. Depending on your provider, you might also have to deal with anything from year-end processing and late submission fees – with high flat rates – to fees for off-cycle pay runs, terminations, and ROEs. Many payroll providers charge per employee, and if you’re outsourcing payroll for your mid-size organization, you’re likely paying a hefty amount in extra fees, affecting your bottom line. Internal payroll and finance teams already handle the bulk of calculations and reconciliations, so it doesn’t make sense to pay extravagant fees for work that can done in-house at a higher speed and efficiency.

At Avanti, we wanted to better understand what these payroll costs actually look like for Canadian companies, so we built an In-House Payroll Savings Calculator to compare in-house payroll processing to outsourced payroll. Give it a try to see what you could save.

Accuracy

While some companies believe that outsourcing payroll ensures compliance, the truth is you can’t outsource risk. Mistakes happen, but why trust your payroll to an external provider? Whether you make a mistake or your outsourced provider does, at the end of the day, your organization is responsible for paying deductions on time.

In-house payroll processing ensures that when an organization makes errors, correcting them is as simple as updating, making changes, and editing internally. There is no limit to the number of times information can be reviewed after being sent off, increasing accuracy and compliance. With an outsourced provider, on the other hand, it is typically too late to make a change, putting you in a stressful situation. From contacting your provider and requesting changes or making adjustments to waiting for the next pay period to compensate a new employee correctly. Why waste time waiting for an answer when you already know how to solve the problem? Think about all the regulatory payments your finance team handles today – GST, HST, Corporate Taxes, Workers’ Compensation, and Employer Health Taxes. Remittance payments follow a similar process. Your team already possesses the necessary information to ensure timely and accurate payments, just as with regulatory payments. The only difference is when your team makes remittance payments, you have control over the audit trails of those payments.

When using an in-house payroll system to remit to Service Canada and CRA, all that’s left to do after the heavy lifting of calculations and reconciliation is complete is make your payment by following steps as simple as paying a bill online. At Avanti, we provide an easy-to-use Receiver General and Québec Remittance report that is similar to the PD7A report, indicating how much is owing and when it’s due.

With Avanti’s in-house payroll solution, you can also set up automated alerts and notifications, so you don’t forget to make important payments. And if you notice a deduction error before your remittances are due for payment, off-cycle pay runs in Avanti provide you with added peace of mind to adjust for the current pay period when needed.

Year-End Processing – Control From T4s to CRA Remittances

T4 Flexibility

With in-house payroll processing, you get more flexibility with T4s and year-end functionality. You can run T4s at any time, even off-season, giving you ample time to confirm they are mistake-free before submission, rather than being told when you need to run your T4s.

Configurable Tax Slip Special Boxes

Going in-house gives you much more flexibility with specialized requests, including new earnings for new boxes and tax slips for employees with special boxes. Having the option for special boxes is key for diverse organizations with complex needs. A great in-house solution isn’t one size fits all, it should be configurable to meet all your requirements.

Balanced CRA Remittances

Working with an in-house payroll processing system allows you to balance your CRA remittances. You can manage your own programming, remittances, and deposits, resulting in fewer errors.

Once all your payroll activity is collected, your payroll team can compare the remittances that are supposed to be submitted to what was actually submitted. These remittances inform you if all the information in boxes (associated with each employee) balances with their T4 summary.

Timeliness

In payroll, timing is everything. With outsourcing, everything is done on your outsourced provider’s watch, requiring you to constantly adapt your processes to fit their timeline. Most outsourced providers require you to submit your payroll 2-5 days in advance of payday, giving you less time to get your work done every pay cycle. When you go in-house, you choose flexibility and control. That one-size-fits-all outsourced solution goes out the door. No longer are you adjusting your process to work for your outsourced provider, you are tailoring your payroll cycle to what works best for your organization.

Do things your way, when you want, and without the extra charge. Run payroll and T4s at your convenience, reconcile your remittances, process your own ROEs, and make compensation adjustments as you go.

Along with calculating interest, Avanti’s In-House Payroll Savings Calculator helps you measure the time you're losing to advance payroll submissions. Check it out!

The best payroll system and exceptional customer support are all you need!

If you’re looking at solutions for an in-house provider, here are a few things to keep in mind:

• Customer support – A great customer support team will be your partner in getting work done. At Avanti, our customer support team is our pride and joy. Specializing in Canadian payroll and workforce management, our support is in-house, in Canada, and always on-hand to help you with anything from T4 updates to union complexities.
• Configurability – Every business is unique, which is why you need an online payroll solution built to handle all the complexities associated with running your business. If you require unique tools, ask prospective vendors about GL integration, multiple business numbers and jurisdictions, collective bargaining agreements, multi-union support, and custom earning codes with configurable formulas.
• Transparent pricing – Get upfront and honest about money. Most mid-size businesses do well with a simple pricing model that is all-inclusive.  Avanti charges on Per Employee, Per Month (PEPM) which means no hidden fees and no additional costs for creating payroll EFTs, tax slips or web ROEs, off-cycle payroll runs, electronic pay statements.
• Full Control – From reporting to changing earning codes and more – look for a self-service model that empowers you to achieve more in less time.

Additional Reading Links

1. In-house vs Outsourced Payroll | Avanti
2. ‍Are you in or out? Outsourcing Payroll vs. In-House Processing | Avanti
3. ‍In-House vs. Outsourced HRIS | Avanti