Online Payroll Processing vs 
 Payroll Processing Software

In-house payroll software has been around for years, but online payroll processing software(sometimes referred to as Cloud based) is becoming the preferred choice for many companies. Both have advantages and disadvantages; to help you decide which is best for you, consider the following:

Payroll Processing Software Advantages

1) You have total control of your data. Should you decide to change payroll business services in the future, all your data will be archived for you on your own system and will still be easily accessible to you; with online payroll processing you will only have the reports they send you summarizing the data.

For example, if the Department of Labor requested the wages of a particular employee for last June, with the PC based payroll processing software you would be able to date-range the month of June, and come up with a total figure relatively quickly and easily.

By contrast, after you leave the online system you only have the reports, and you would need to look up each individual week for the month of June and add up the total; you would still be able to retrieve the necessary data, but it may take you more time.

2) Although up-front costs are are larger than a month's fee for online payroll services, In-house payroll processing software is usually less expensive in the long run.

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Payroll Processing Software Disadvantages

1) You must back up all the data yourself. If you ever have a computer crash, you could re-load the software, but all your data would be lost unless you are vigilant about backing up your data often.

2) You can only access your data from the computer on which it is loaded.

3) Cost is all up-front. Companies must come up with a lump sum of money to cover the entire cost of the software; by contrast, online payroll is billed monthly.

Online Payroll-Processing Advantages

1) You are able to access your data from anywhere. 

2) When an upgrade becomes available, your payroll company will automatically give it to you. Unlike payroll processing software which remains static on your PC, when 

3)All of your data is backed up for you by your provider's computer server.  In the event of a natural disaster, fire, or simply a computer virus, your data is secure. It is also standard protocol for all payroll processing system providers to have safety mechanisms to back up your data redundantly in case of emergency as well.

4)Payments are "pay as you go," with fees being swept from your operating account monthly.

Online Payroll Processing Disadvantages

1) For most online payroll services providers, the monthly "hosting charge" is comparable to outsourcing (but with outsourcing, they take responsibility for your taxes.)

2) When you decide to leave or change payroll business software, all you have are your ongoing reports; you no longer have your complete "database" (see #1 under PC Payroll Processing Software Advantages).

Since there is no "one-size-fits-all" approach to payroll, weighing the pros and cons of both in-house payroll processing software and online payroll processing will help you make an informed decision about the best approach for your particular needs.

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