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I was let go as an IT director by a company during an economic decline since they thought they could get a cheaper deal via outsourcing. What they failed to notice, is what I actually did there!I had built the company VOIP phone system from scratch with Linux and Asterisk and made all changes. The mail and file server was also linux, which the new outsource firm had no experience with, they were a typical low end Windows only shop with a bunch of entry level techs.I had installed the financial system on which I was an expert, and since they had laid off the payroll admin, I was they only one who understood the project and job cost tracking and the payroll and taxes. I had been running payroll for the last month by myself.I (as a former principal project manager) was helping all the construction sites do their schedules. Most of them had no formal scheduling experience and could barely use a computer, much less produce a schedule for a fifty million dollar project.I was the person resolving all the audit questions for the brand new accounting director (who came up with the outsourcing idea) He had no idea how to do any of it (I had designed the financial statements and even the tax withholding math).I knew it was coming for two months since I had to debug next years budgets, so I had formed a consulting practice, and when the owner wanted to speak to me just before Christmas (when he always did his layoffs…real classy!) I went to my office and brought in my consulting contract, left him a copy and nicely told them to call me if they had any issues, but I would be charging for my time.A week later, I got the most hilarious email from accounting telling me I would have to work night and weekend (unpaid, I was salaried) overtime to resolve all their audit issues in time for my official layoff date (they really said that!). I thanked them for a great laugh!The new tech support company wound up putting me on speed dial.I then moved to my beach house 100 miles away, and made a six figure consulting income for the next 5 years semi - retired at the beach.

I noticed this post without a lot of answers; therefore wanted to takeminute and provide some additional information since there aremany different reasons for outsourcing anything. If you are looking forthe reasons organizations outsource payroll and HR, perhaps you areactually looking for answers to why a company would use a ProfessionalEmployment Organizations (PEOs) or employee leasing companies. These companies are organizations that help other businesses by offering anumber of valuable services to their customers. In general, PEOs provide organizations with payroll services, access to workers compensation policies, help in managing their human resources, risk management (i.e. employee manuals and other services), which at times may be difficult for these same organizations to manage on their own. As a result of this more efficient way of managing workplace processes and workplace safety, companies can further reduce administration costs while remaining focused on their core business strategy.PEOs also help companies gain more control over their costs of worker compensation coverage since most of the time workers’ comp rates are based on actual hours worked, so a company is exactly even every week and the worry of tax penalty goes away because the PEO pays all the state and federal taxes under their FEIN.Additionally, most PEOs help organizations with their hiring practices by attracting and retaining good employees, while reducing their employee turnover and unemployment compensation claims, which is critical in today’s workingenvironment. Because most employee leasing companies also represent anumber of different employers these companies usually have access to a larger pool of workers. In turn, having access to a larger pool of workers can sometimes help lower the costs associated with certain employee benefits such as health and dental insurance, supplemental insurance, and even 401(k) retirement plans, which many companies cannot afford individually but now can because of the buying power of an employee leasing company (U.S. Department of Labor).On the other hand, if you are looking for reasons why you would outsourceyour payroll, well much like in a PEO arrangement there are several reasons. The first is you avoid paying an IRS penalties since most payroll companies provide a “tax guarantee” that ensures customers pay no penalties and according to a recent IRS report about 40% of all small businesses pay average yearly penalties of $800 or more per year because they filed late and/or supplied incorrect filing information. Secondly, and just like in a PEO arrangement the direct cost of processing your payroll goes away. In a recent study conducted at the University of Texas-Arlington showed this expense can be as large as 8.5% of the total yearly gross payroll, which obviously frees up your time and money to invest in other money generating activities and avoid any unnecessary headaches associated with keeping up with technological advances. Thirdly, you are able to offer direct deposit, which most of the time can be extremely difficult if you do not use a payroll company. Finally, you are able to leverage the experience of the outside payroll processor as many organizations that employee payroll processors make sure they are Certified Payroll Processors (CPP), which means you can take advantage of a benefit (they keep abreast of all changing regulations, withholding rates, and government forms) that was once only available to large organizations. All these benefits at a fraction of the cost it would cost you to do it yourself clearly outweigh the headaches of having to worry if or in many cases whenthings do go wrong.The most important thing to remember between a PEO and a Payroll Processoris in a PEO arrangement all tax and workers comp claims are filed underthe PEO’s FEIN number versus a Payroll Processor who files taxinformation or workers compensation claims under your company FEIN.I sure hope this helps more and if you would like more information onEmployee Leasing Companies or Payroll Processors, you can respond hereor call me personally at 813-474-2705 to discuss how you continue toremain focused on growing your bottom line, so you have a competitiveadvantage over your competition.Otherwise, keep smiling, and thanks for asking such a great question—Best Regards, David

This is going to be a long answer, but it is a real stress test Elon Musk went though. There was a time in his career where either SpaceX or Tesla could have died but this answer describes the way Elon Musk made both companies survive and the way he dealt with the stress he faced which could've killed any other person, if he/she were in Elon's shoes.SpaceX, like Musk’s other company, Tesla, was facing a major cash shortage. SpaceX had the Falcon 9 efforts to support and had also green-lighted the construction of the Dragon capsule, which would take supplies and, one day, humans, to the International Space Station.Historically, either project would have cost more than $1 billion to complete, but SpaceX would have to find a way to build both machines simultaneously for a fraction of the cost. The company had dramatically increased the rate at which it hired employees and moved into a much larger headquarters. SpaceX had a commercial flight booked to carry a satellite into orbit for the Malaysian government, but that launch and the payment for it would not arrive until the middle of 2009. In the meantime, SpaceX simply struggled to make its payroll. Just when it figured out how to fly a rocket, SpaceX was going broke.As bad as they were, the financial problems did not compare to the collapse of Musk’s personal life. Not long after moving to Los Angeles, Musk had lost his 10-week-old son, Nevada Alexander, to sudden infant death syndrome. “I’m not sure why I’d want to talk about extremely sad events,” Musk told me. “It does no good for the future. If you’ve got other kids and obligations, then wallowing in sadness does no good for anyone around you. I’m not sure what should be done in such situations.” Musk went on to have five more sons with Justine—twins and triplets—but their relationship broke apart in 2008, and Musk filed for divorce. Justine soon began documenting the divorce on a blog, and the press was all too happy to merge the personal details into stories of Musk’s financial woes.Reporters seemed to take a special pleasure in attacking Tesla. The electric car maker had suffered through numerous product delays, management changes, and cost overruns. After five years and tens of millions of dollars, there was still no Tesla available to buy. A website called the Truth About Cars began a “Tesla Death Watch” in May 2008 and followed up with dozens of entries throughout the year. The blog captured Tesla’s engineering issues and Musk’s feud with Tesla co-founder Martin Eberhard, who’d been forced out of the company.“I was just getting pistol-whipped,” Musk said. “There was a lot of schadenfreude at the time, and it was bad on so many levels. Justine was torturing me in the press. ... It hurt really bad. You have these huge doubts that your life is not working, your car is not working, you’re going through a divorce and all of those things. I felt like a pile of s---. I didn’t think we would overcome it. I thought things were probably f---ing doomed.”When Musk looked at the numbers, it looked like only one company would survive. “I could either pick SpaceX or Tesla or split the money I had left between them,” Musk said. “That was a tough decision. If I split the money, maybe both of them would die. If I gave the money to just one company, the probability of it surviving was greater, but then it would mean certain death for the other company. I debated that over and over.” In the meantime, the economy was worsening, and spacecraft and sports cars seemed out of place in a time of near-record unemployment.The brightest light in Musk’s life at the time was Talulah Riley, a 22-year-old British actress he had started dating and would later marry. She viewed Musk’s life as Shakespearean tragedy. Sometimes Musk would open up to her, and other times he retreated into himself. Riley spied on Musk while he read e-mail and watched him grimace as bad news poured in. “You’d witness him having these conversations in his head,” she said. “It’s really hard to watch someone you love struggle like that.” Because of the long hours that he worked and his eating habits, bags formed under his eyes. “He looked like death itself,” Riley said. “I remember thinking this guy would have a heart attack and die. He seemed like a man on the brink.”Burning through about $4 million a month, Tesla needed to close another major round of funding to get through 2008 and stay alive. Musk had to lean on friends just to make payroll from week to week as he negotiated with investors. He sent impassioned pleas to anyone he could think of who might be able to spare some money. Bill Lee, a wealthy friend, invested $2 million in Tesla, and Sergey Brin, co-founder of Google, invested $500,000. Kimbal had lost most of his money during the recession but sold what investments he had left and put it into Tesla as well. The company had set the prepayments that customers made for the Roadsters aside, but Musk now needed to use that money to keep the company going. Soon those funds were gone, too. These maneuvers worried Kimbal. “I’m sure Elon would have found a way to make things right, but he definitely took risks,” he said.In December 2008, Musk heard a rumor that NASA was on the verge of awarding a contract to resupply the space station. SpaceX’s fourth launch had put it in a position to receive some of this money, which was said to be in excess of $1 billion. Musk reached out through back channels in Washington and found out that SpaceX might even be a front-runner for the deal.As for Tesla, Musk made a last-ditch effort to raise all the personal funds he could. He took out a loan from SpaceX, which NASA approved—Musk did not want to mess up his chance for a contract—and earmarked the money for Tesla. He went to the secondary markets to try to sell some of his shares inSolarCity, a solar panel installer where he served as chairman. He lucked into about $15 million that came through when Dell acquired a data center software startup called Everdream, founded by Musk’s cousins, in which he had invested.Musk finally put together about $20 million and asked Tesla’s existing investors—since no new investors materialized—to match that figure. The investors agreed, and on Dec. 3, 2008, they were in the process of finalizing the paperwork for the funding round when Musk noticed a problem. VantagePoint Capital Partners had signed all of the paperwork except for one crucial page. Musk phoned Alan Salzman, VantagePoint’s co-founder and managing partner, to ask about the situation. Salzman told Musk that the firm had a problem with the investment round because it undervalued Tesla.Salzman asked Musk to come in the following week at 7 a.m. to present to VantagePoint’s top brass and explain the deal. Not having a week of time to work with, Musk demanded to come in the next day, and Salzman refused, forcing Musk to continue taking on loans. “The only reason he wanted the meeting at his office was for me to come on bended knee begging for money so he could say, ‘No,’ ” Musk theorized. “What a f---head.”VantagePoint declined to speak about this period, but Musk believed that Salzman’s tactics were part of a mission to bankrupt Tesla. Musk feared that VantagePoint would oust him as CEO, recapitalize Tesla, and emerge as the major owner of the carmaker. It could then sell Tesla to a Detroit automaker or focus on selling electric drivetrains and battery packs instead of making cars.In response, Musk took another huge risk. Tesla recharacterized the funding as a debt round, knowing that VantagePoint could not interfere with a debt deal. The tricky part of this strategy was that venture capital investors, such as Draper Fisher Jurvetson, are not structured to do debt deals. Persuading their backers to alter their rules of engagement for a company that could very well go bankrupt in a matter of days would be tough. So Musk bluffed. He told the investors that he would take another loan from SpaceX and fund the entire round—all $40 million—himself. The tactic worked: The investors handed over $20 million. “When you have scarcity, it naturally reinforces greed and leads to more interest,” Steve Jurvetson said. “It was also easier for us to go back to our firms and say, ‘Here is the deal. Go or no go?’ ”In the meantime, at SpaceX, Musk and top executives had spent most of December in a state of fear, but on Dec. 23, 2008, SpaceX received a wonderful shock. The company won a $1.6 billion contract for 12 NASA resupply flights to the space station. Then the Tesla deal ended up closing successfully, on Christmas Eve, hours before Tesla would have gone bankrupt. Musk had just a few hundred thousand dollars left and could not have made payroll the next day.Staying with Kimbal in Boulder, Colo., for the holidays, Musk broke down in tears as the SpaceX and Tesla transactions processed. “I hadn’t had an opportunity to buy a Christmas present for Talulah or anything,” he said. “I went running down the f---ing street in Boulder, and the only place that was open sold these s----- trinkets, and they were about to close. The best thing I could find were these plastic monkeys with coconuts—those ‘see no evil, hear no evil’ monkeys.”Antonio Gracias, a Tesla and SpaceX investor and one of Musk’s closest friends, had watched all of this transpire; 2008 told him everything he would ever need to know about Musk’s character. “He has the ability to work harder and endure more stress than anyone I’ve ever met,” Gracias said. “What he went through in 2008 would have broken anyone else. Most people who are under that sort of pressure fray. Their decisions go bad. Elon gets hyperrational. He’s still able to make very clear, long-term decisions. The harder it gets, the better he gets.”Source: Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future (book)