The economic meltdown has many companies evaluating methods for preparing payroll. Some are looking anew at whether to bring the administrative nightmare of payroll processing in house where they can avoid the fees associated with an outsourced payroll service. Most of these thoughts of saving money discount the many areas that outsourced payroll actually save money such as removing extra time that internal staff spend administering payroll records.

Handling the processing nightmare of payroll consumes far more time and effort than the typical company admits. Employees lose W-2 forms and expect accounting staff to drop all tasks while a new copy is created. Inaccurate or late payroll tax deposits result in significant late fees and penalties.

If you're still thinking that doing payroll yourself is a savings, consider these many benefits an online payroll service offers:

Employee Self-Service. Maintaining employee data (names, addresses, deductions, exemptions, extra withholding) is all quite manageable when the numbers of employees are low.

What happens when you're faced one day with 25, 50 or more than 100 employees?

The time it takes to manually update the sporadic request to change data is easy to underestimate as your numbers of employees rise above "a handful."

And because employee data is confidential, you likely only have one or two people in the office who are able to make these changes. This further increases the burden on your accounting staff. What if, instead, your employees were able to maintain their own payroll data? Address changes, exemptions and even deductions can typically all be self-maintained when the payroll has been moved to an online processing service.

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