Payroll plays an important role in maintaining employee satisfaction in the organisation. It includes:
- Salary payments
- Tax withholding
- Deductions from a paycheck
Payroll services offer an attractive and valuable alternative to in-house processing. Payroll outsourcing services on the other hand refers to an allocation of some specific business processes (in addition to the ones mentioned above) to an expert. These services are usually offered by third-party service providers to companies who seek to hand over their payroll operations to the experts. Instead of in-house accountants or employees handling the payroll of the company, an outside company will process the payroll. These would include all payroll processing activities and making sure that the computations are accurate.
However, as the business grows, most owners find that their time becomes more valuable doing other things. The finite hours in the day are better served by focusing on building the core business, not overseeing day-to-day bookkeeping. When a business owner is no longer able to be involved in every aspect of a business, that is when the business begins to need more than bookkeeping. Most bookkeepers only know how to handle billing, collections, payroll, deposits, sales taxes, bank account reconciliation and basic financial statements.
Outsourcing payroll will give you access to specialised professionals for a range of solutions. One of the main functions of the payroll team is to remain compliant with the latest payroll legislation and award rates. Given the complexity of tax and legal systems across the globe, this can be a time consuming job of the payroll team. Using a specialised provider the payroll functions are completed using best practice principles where the latest tax regulations are adhered to and award rates can be adjusted in a timely manner. Furthermore, by outsourcing it will reduce the need for regular intensive internal training sessions that can additionally alleviate costing pressures.
What are the benefits of payroll outsourcing services?
Payroll services when outsourced benefit companies and individuals in a sense that the latter need not hire employees to process the payroll. This method helps them save on salaries and operating costs. Also, payroll processing would be timely as an external team focused on said work is hired, in contrast to in-house employees who may be performing other functions. Although these are not the only benefits of outsourcing your payroll services:
Companies have to be careful about how they use of human resources available to them. The processing of the payroll is a non-core task. It does not produce any revenue for the company, though, compliance-wise it is an essential activity. That is why the owner or management has to think before committing highly-skilled HR professionals for the task. A majority of startups and small companies cannot afford to hire a specialist for the task. Doing so puts a strain on their financial resources.
By partnering with payroll service providers who work at a global scale, companies can make sure that they execute standardized payroll across all the locations that their business is spread out over. It helps them achieve highly improved levels of efficiency in maintaining payroll performance everywhere.
However Payroll Outsourcing can prove to be a bit of an issue for the first time, as it does not depend on one single factor.
Here are a few things that you should keep in mind:
- Make sure you have a clear idea of the functions you want to outsource. What’s most important to the company? Try to find a service provider that offers end to end solutions and yet allows to customize the package according to the company’s requirements at that particular point of time.
- Check the company’s previous and recent work history. Make sure that the company has similar experience to your project. Also find out their user feedback from other clients if possible. Experience and expertise do not come hand in hand. Different projects need different team size with a mix of experience.
- It is important to determine how you will be charged for the work that an outsourced payroll provider performs for your business. Do they charge a fee for each pay processed? Do they tailor their services and prices dependent on the work performed? Or do they just offer packaged deals?
- When selecting the provider make sure you see the product in action. That may be as simple as getting them to run through a demo payroll run so you can get a feel for the capabilities of their product and experience of their team.
- Have realistic expectations about what your provider can bring to the table. Don’t risk quality of service by simply going with the cheapest provider. Allow time for any unforeseen changes from management.
In today’s competitive marketplace, payroll outsourcing is not merely a trend but a boon for most companies as they have to deal with one less hassle.