payroll myths explained by Liberty Payroll

For small business start ups and growing businesses, payroll can be intimidating and daunting. Between the state and federal regulations and tracking quarterly and yearly tax cycles, any business owner may take a hard look at outsourcing. Whether you are looking to grow your business or stay compliant, here is a look at the top payroll myths you must have heard – finally debunked.

Myth #1: It is Easier to Payroll In-house if You’re a Small Business

Regardless of the number of employees you have, the amount of tracking, loops, hurdles and compliance remains the same. As your company grows, you can easily scale up your payroll and HR needs and the time and effort will be marginal.

Myth #2: Consistency and Timing of a Paycheck Isn’t Important to Everyone

The federal government has mandated all companies, no matter what size and location, must follow a fixed set of payroll regulations. The truth is over time, employees will leave a company if the payroll is not done in a consistent and timely manner.

Myth #3: Seasonal Hires Can Be Paid Under the Table

New business owners often make the mistake of not properly documenting seasonal employees. With non- formalized employees, or even tapping into a pool of family and friends, without documentation your small business loses out on several benefits you have as a business owner. Payroll processing can be linked to taxation, aligning income and expenses. Not fulfilling minimum wage requirements can also come back to haunt you!

Myth #4: Outsourcing Your Payroll with Lead to Vendor Lock-In

In the very first year of business, a typical business owner spends anywhere from 6-12 hours a month completing payroll. Investing in a third-party provider means you’ll have to work with them for a period of time no matter what the quality of service they provide. Using a reputable professional payroll provider can also give you the flexibility to switch payroll providers when things are not working out.

“Most of our client base comes from one of the ‘Big Three’ payroll providers,” explained Josh Rothenberg, Sales & Marketing Director of Liberty Payroll and HR. “Once clients realize they cannot get someone on the phone, problems do not get resolved or they enter a payroll land of broken promises, that is usually when we get the call”.

Myth #5 – There is an Exact Amount of PTO to Track

Paid time off (PTO) is a flexible benefit. Several tech companies are doing away with formal PTO accruals and others are now offering flex PTO or Unlimited PTO as a recruitment tool. It is advisable to have some sort of documentation in place, without making the process so cumbersome that employees are impacted.

Myth #6 – Payroll and HR Vendors Do Not Work With Small Companies.

While this was true a few decades ago, modern vendors and payroll software providers are ready with highly scalable solutions. These can take on any number of team members, from two people-strong company to a 500+ employee base. You could look at award winning payroll companies that are local to your marketplace and have expert knowledge about the state’s laws.


In conclusion, we hope we have helped you debunk some of the modern myths about payroll and HR. As a small business owner, you have probably heard these payroll myths time and time again – confusing and influencing your approach to an essential business process. Do not ignore compliance regulations before it is too late; with hundreds of payroll solutions out there, it takes very little time to do your homework and strengthen your business’ foundation, with an eye on future progress.

Liberty Payroll and Human Resources Services

A Better Way to Do Payroll

Liberty Payroll and HR offers industry-leading, full-service, precision and customized payroll processing and tax management that is fast and easy for businesses of all sizes. Our Payroll and Tax Management Solutions deliver peace of mind to you and your employees.