Outsourcing payroll or doing it with in-house software: what suits an SME
Sooner or later every SME asks itself: do we stay with the accountant or do we run payroll ourselves? The easy answer is “it depends on size”, but size is only one factor. Outsourcing payroll or calculating it with in-house software are two ways of splitting the same work, and there is a third, the hybrid model, which is what many companies with 20 to 100 employees end up using. In this guide we explain what each option involves, which obligations can never be outsourced, how to decide, and why the part of the job almost nobody counts, distributing and archiving payslips, is the one that takes the most time.
What lies behind a payslip
Before deciding who does it, it helps to see everything that “doing payroll” involves each month in Spain:
- Calculating pay according to the collective agreement, category and seniority; applying the month’s variables (overtime, allowances, incentives, absences, sick leave, holidays); calculating income-tax withholding and social contributions.
- Reporting contribution bases and incidents to Social Security through the RED System and filing the settlements; sending the file of paid remuneration items; handling registrations, terminations and changes.
- Filing withholding returns with the tax agency (form 111 quarterly or monthly and form 190 annually) and issuing withholding certificates.
- Delivering each worker their payslip and keeping proof that they received it.
- Archiving payslips and documentation for the legal period and having it ready if the Labour Inspectorate or the worker asks for it.
The first three points are calculation and administration; the last two are distribution and archiving. When people talk about outsourcing, they almost always mean the first three. The other two always stay in the company.
What the law does not let you outsource
Whoever calculates, the company is responsible to the worker, to Social Security and to the tax agency. And some obligations fall on it by name:
- The payslip (article 29 of the Workers’ Statute): the company must document payment with an individual receipt, in the official model or the one set by the agreement, and deliver it to the worker.
- Proof of delivery. Traditionally the worker’s signature on the payslip; today the Supreme Court accepts delivery in electronic form as long as the worker can access the payslip and keep it. The signature remains the strongest proof, which is why it should be digital and traceable.
- Retention of payslips and contribution documentation for a minimum of four years, the limitation period for infringements and Social Security debts.
- Liability. If the accountant makes a mistake, the penalty or surcharge lands on the company; it can then claim against the accountant under their contract.
The three options
Outsourcing to an accountant or employment advisory firm
The accountant calculates, reports and files. The company sends them the month’s variables, receives the payslips as PDFs and pays them.
For: you do not need to know the collective agreement or contribution rules, which change every year; technical responsibility for the calculation lies with a professional; the cost is predictable and proportional to the number of payslips. Against: you depend on someone else’s deadlines, every incident is an email, knowledge of your workforce sits outside the company, and the accountant rarely handles distributing payslips or collecting signatures.
In-house payroll software
The company calculates with a payroll program (we compare the most used in Spain in most used payroll software) and an internal person with employment-law training takes care of everything.
For: total control, immediacy to simulate and correct, and the knowledge stays in house. Against: you need someone who knows payroll and keeps up with every regulatory and agreement change; if that person is absent, payslips do not go out; and technical liability is entirely yours.
Hybrid model
The accountant calculates and files, and the company manages with its HR software everything that happens before and after: clock-ins, absences, leave and variables sent to the accountant already organised, and distribution, signature and archiving of the payslips the accountant returns. It is the most common model in SMEs that have digitised the rest of HR: the accountant does what they know how to do and the company stops typing variables and handing out PDFs by hand.
Comparison table
| Criterion | Accountant | In-house software | Hybrid |
|---|---|---|---|
| Who calculates | The accountant | The company | The accountant |
| Agreement and contribution knowledge | The accountant’s | Internal, must be maintained | The accountant’s |
| Monthly variables (hours, absences) | Sent by hand | Entered in the program | Come from the HR software |
| Payslip distribution and signature | Usually not included | Depends on the program | In the HR software |
| Four-year archive | In the company | In the company | In the HR software |
| Dependence on one person | Low | High | Low |
| Cost | Fee per payslip or per worker | Licence plus the person’s time | Accountant plus €2 per employee per month |
How to decide
- Fewer than 10 employees. Accountant, almost always. The volume does not justify training someone or paying for a payroll program, and the risk of internal error is high. What is worth solving is delivery and signature of payslips.
- 10 to 50 employees. The hybrid model usually wins: the accountant calculates and the company organises variables and distributes payslips from its HR software. It is where the most hours are saved, because variables stop travelling by email and payslips stop being handed out one by one.
- More than 50 employees, or an agreement with many variables. An internal person with payroll software starts to pay off, especially with shifts, variable allowances or several agreements. Even so, many companies keep the accountant for tax forms and Social Security.
- At any size, if the accountant is slow, gets variables wrong or you are not sure what was delivered to whom, the problem is not the accountant but the circuit: organise variables and distribution before changing provider.
And one rule for not fooling yourself on cost: do not compare only the accountant’s fee with the program’s licence; in both cases add the internal hours spent collecting variables, handing out payslips, chasing signatures and looking for documents. We explain how to do that calculation in how to calculate the ROI of HR software.
The job nobody counts: distributing and archiving
Whatever the model, every month you have to get each person their payslip, have proof they received it and keep it for four years. Done by hand that means individual emails, printouts, paper signatures and folders. It is the job LapsoWork solves without replacing your accountant:
- Batch upload: you upload a single PDF with the whole workforce’s payslips and LapsoWork splits them by employee.
- Automatic assignment and notification: each payslip is delivered to the corresponding employee portal and they get a push notification in the app.
- Signed receipt: the worker signs receipt biometrically from their phone, with legally valid evidence.
- History per employee: each person can consult their previous, signed payslips whenever they want, and the company has the complete archive.
- Compatible with your accountant: they keep calculating; LapsoWork handles distribution, signature and archiving.
It is included in the Basic plan, at €2 per employee per month, together with time tracking, leave and document management. Details are on the payslip distribution page and on our pricing page. And if you want to know how signing from the phone works, we explain it in app to sign documents.
Frequently asked questions
Is it better to outsource payroll or do it in the company?
It depends on size and on the complexity of the collective agreement. Below ten employees the accountant almost always pays off; between ten and fifty the hybrid model usually wins, with the accountant calculating and the company organising variables and distributing payslips with its HR software; above fifty or with many variables an internal person with payroll software starts to pay off.
Which obligations can I not outsource even with an accountant?
The company remains responsible for delivering each worker the payslip under article 29 of the Workers’ Statute, keeping proof of that delivery, retaining payslips and contribution documentation for at least four years, and answering to Social Security, the tax agency and the Inspectorate for errors, even if it later claims against the accountant.
Can I deliver payslips electronically?
Yes. The Supreme Court accepts delivery of the payslip in electronic form as long as the worker can access it and keep it. A digital signature of receipt, such as the biometric one from the phone, additionally provides proof of receipt.
Does LapsoWork calculate payroll?
No. The calculation is done by your accountant or your payroll program. LapsoWork distributes the calculated payslips: it splits the PDF by employee, delivers them in the app, collects the biometric signature of receipt and keeps the history. It is included in the €2 per employee per month Basic plan.
How much does outsourcing payroll to an accountant cost?
Each accountant sets their own fee, usually per payslip or per worker per month, and it tends to vary with the agreement and the number of incidents. When comparing it with in-house software, add in both cases the internal hours spent collecting variables, handing out payslips and chasing signatures: that is where the real difference lies.
Conclusion
Outsourcing payroll or doing it with in-house software is a decision about size, agreement and who you want to hold the knowledge, but neither option frees you from delivering, signing and retaining payslips, nor from organising the variables that feed the calculation. That is why the hybrid model works so well in SMEs: the accountant calculates and the HR software does the rest. To see how payslip distribution would look in your company, try LapsoWork free for 30 days.