According to, New Jersey Senator Frank Lautenberg and his two brothers founded the first payroll service company in 1949. Compared to today, the company used basic payroll tools for payroll services. Now, employee's hourly or salary pay must be calculated including any Social Security and/or Medicare, state, federal and even local taxes each paycheck. The task requires much time, so a payroll service can make it easier, though there are some disadvantages.

Cost and Time Saving Advantage

Figure out how much time it takes to prepare and process your payroll services and you might find you'd save time if you let someone else take care of it. Once you've calculated the time it takes, think about the expense it takes to print checks, create tax documents, or purchase and upgrade software to do it all.

If you're in big business and have many employee payroll services to manage, you're most likely to come out on top saving time and money by hiring a payroll service to accurately mange your payroll needs in a timely and cost-effective manner--especially if you can find an affordable company.

Confidentiality Disadvantage

Whenever you share your business and employee information there is a risk that the information might be exposed in a negative manner. Most payroll service companies will assure you of their strict privacy policies, but it doesn't mean the information can't accidentally end up in the wrong hands, jeopardizing individual employees or the business itself. It's a matter of weighing the options and pursuing legal advice about how to protect your business and employees before making any final decision on your payroll service provider.

Expert Insight Advantage

A payroll service company makes it their business to know the current technology trends and legislation news. Working with a company that has this kind of information becomes an asset to your business, because you'll benefit from the information. Additionally, these companies typically have expert local, state and federal tax knowledge that makes for a great resource to you and your payroll service needs.

Cost Disadvantage

Though a big business with big money and earnings may save money with a payroll service company, a small business with small money and earnings may end up wasting money. If your business doesn't have more than 20 employees, it's probably best to calculate time and cost that will be saved to see if it is worth it to invest in a payroll service company, at least until your business grows.