Outsourcing Payroll vs Doing It Yourself

Introduction
Understanding outsourcing payroll vs doing it yourself is essential for business owners deciding how to manage payroll accurately, efficiently and in compliance with CRA and Revenu Québec rules. Payroll is one of the most sensitive administrative functions in any business because employers must calculate income tax, CPP/QPP, EI/QPIP, HSF and CNESST accurately—every pay period. Mistakes lead to penalties, interest, employee dissatisfaction and audits. The decision between outsourcing payroll vs doing it yourself has major implications for cost, compliance, administrative workload, and long-term risk. This guide explains everything businesses need to know when comparing outsourcing payroll vs doing it yourself in Québec and across Canada.

Legal and Regulatory Framework
Payroll management—whether outsourced or done internally—is governed by:

• Income Tax Act
• Canada Pension Plan Act (CPP)
• Employment Insurance Act (EI)
• Québec Taxation Act
• QPP and QPIP rules
• CNESST regulations
• HSF rules
• CRA and Revenu Québec payroll policies

No matter whether you choose outsourcing payroll vs doing it yourself, the employer remains legally responsible for:

• correct withholding of payroll deductions
• timely remittances to CRA and Revenu Québec
• issuance of accurate T4 and RL-1 slips
• proper classification of employees
• correct reporting of taxable benefits
• maintaining payroll records for at least six years

The liability cannot be transferred—even when payroll is outsourced.

Option 1: Doing Payroll Yourself (DIY Payroll)

DIY payroll means the employer handles all payroll duties in-house, usually using software such as QuickBooks, Wagepoint or Ceridian.

Advantages of DIY payroll:

• lower direct costs
• full control over payroll processing
• immediate access to payroll data
• no reliance on external providers

Disadvantages of DIY payroll:

• high risk of compliance errors
• time-consuming for business owners
• complicated federal + Québec rules
• difficult treatment of taxable benefits
• frequent updates required for new payroll legislation
• potential for CRA/Revenu Québec reassessments

DIY payroll is especially risky in Québec due to:

• QPP vs CPP rules
• QPIP vs EI
• HSF calculations
• CNESST classifications
• separate Québec RL-1 and RL-1 Summary filings

DIY payroll requires strong knowledge of payroll compliance.

Option 2: Outsourcing Payroll

Outsourcing payroll means hiring a CPA firm or payroll provider to manage payroll end-to-end.

Advantages of outsourcing payroll:

• reduced risk of payroll errors
• compliance with both CRA and Revenu Québec rules
• expert handling of taxable benefits
• automatic updates to payroll legislation
• T4 and RL-1 slip preparation
• accurate deductions every pay period
• audit protection and support during CRA/RQ reviews
• frees up business owner time
• improved employee confidence in pay accuracy

Disadvantages of outsourcing payroll:

• direct monthly cost
• less hands-on control
• need to choose a reliable provider

For most businesses—especially those operating in Québec—outsourcing payroll reduces long-term financial, legal and administrative risk.

Payroll Requirements Unique to Québec (Why DIY Is High-Risk)

Outsourcing payroll vs doing it yourself becomes especially critical in Québec because payroll must include:

• QPP (instead of CPP)
• QPIP (instead of EI parental benefits)
• Québec income tax
• CNESST premiums
• HSF (Health Services Fund contributions)
• RL-1 slips and RL-1 Summaries
• QST taxable benefit rules

Businesses that operate in both Québec and other provinces must calculate both federal and Québec-specific deductions every pay period. One small mistake in outsourcing payroll vs doing it yourself can expose employers to:

• penalties
• late fees
• employee claims
• payroll audits
• cross-jurisdiction reassessments

This is why many Québec employers outsource payroll to experts.

Key Court Decisions

Courts have ruled repeatedly that employers—not payroll providers—bear the liability for payroll errors. Key principles:

• outsourcing payroll does not eliminate employer responsibility
• employers must verify accuracy of outsourced payroll reports
• failing to remit payroll deductions triggers director liability
• misclassification of workers leads to retroactive assessments
• taxable benefits must be reported even when outsourced
• Québec courts enforce strict compliance with QPP/QPIP and CNESST

These rulings highlight the importance of choosing the right approach to outsourcing payroll vs doing it yourself.

Why CRA and Revenu Québec Audit Payroll

Payroll audits are triggered by:

• late remittances
• T4/RL-1 discrepancies
• misclassified employees
• missing taxable benefits
• errors in CPP/QPP and EI/QPIP
• HSF imbalances
• CNESST under-reported payroll
• employee complaints

Whether outsourcing payroll vs doing it yourself, audits occur when filings are inconsistent, late or incorrect.

Mackisen Strategy

Mackisen CPA offers a complete payroll system that eliminates the risks of outsourcing payroll vs doing it yourself:

• registering CRA and Revenu Québec payroll accounts
• calculating accurate deductions for CPP/QPP, EI/QPIP, tax, HSF and CNESST
• preparing T4/RL-1 slips and summaries
• automating remittances
• integrating payroll with bookkeeping and corporate tax
• tracking taxable benefits
• issuing pay stubs on time
• reconciling all payroll filings at year-end
• defending clients during payroll audits
• correcting historical payroll errors

Our payroll service is designed to be audit-proof and fully compliant with federal and Québec laws.

Real Client Experience

Many employers come to Mackisen after payroll issues arise:

• A business attempted DIY payroll and miscalculated QPIP for two years. Revenu Québec issued a large reassessment. Mackisen corrected filings and reduced penalties.
• A consulting firm outsourced payroll to a low-cost provider who omitted taxable benefits. CRA reassessed payroll. We corrected slips and recalculated payroll for the entire year.
• A restaurant mixed contractors and employees incorrectly. We restructured payroll and handled the audit.
• An employer filed RL-1 slips late and faced multiple penalties. Mackisen caught up all filings and set automated deadlines.

These cases show the importance of choosing the right approach when comparing outsourcing payroll vs doing it yourself.

Common Questions

• Is outsourcing payroll safer?
Yes—professionals ensure compliance and reduce audit risk.

• Can I do payroll myself?
Yes, but errors are common and costly—especially in Québec.

• Does outsourcing payroll eliminate liability?
No—the employer remains legally responsible.

• Is Québec payroll more complex?
Yes—QPP, QPIP, HSF and CNESST add major complexity.

• Can payroll providers file RL-1 slips?
Yes—professional firms like Mackisen file both T4 and RL-1 accurately.

• Can I switch from DIY to outsourcing mid-year?
Yes—Mackisen can take over at any time.

Why Mackisen

With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps businesses stay compliant while recovering the taxes they’re entitled to. Whether you're outsourcing payroll or doing it yourself, our expert team ensures precision, transparency and protection from audit risk. When businesses choose Mackisen for payroll services, they receive complete compliance, year-round support, and audit-proof payroll systems.