Payroll involves complex calculation and managing payroll is the most challenging task for your business. If you want to manage payroll in your organization smoothly, you need to have payroll expertise or consultant. In the absence of them, payroll can be an expensive headache for you because businesses can’t afford payroll mistakes. A small error in payroll will cause hefty fines, and make your employees unhappy.
In such scenarios, the best option to manage payroll is outsourcing the services to payroll vendors.
Now the next problem is choosing the right payroll outsourcing vendor
It’s a difficult business decision and many factors have to be considered while selecting payroll vendor. But mainly it depends on your requirements.
You can choose your outsourcing partner checking their services and capability of handling payroll. This is the best way to ease the burden off your shoulders.
But before selecting payroll vendor you should know, when is the right time to pursue a payroll outsourcing vendor is.
We will discuss the same in detail below...
When is the right time to think about payroll vendor?
Payroll is outsourced to increase operational efficiency and productivity of the organization. But when to outsource payroll depends upon the organization and its capacity to conduct payroll in house.
Sometime when organizations lack adequate resources and not have enough time they go for outsourcing. Whereas sometimes when organizations expand their business and grow in size they feel uncomfortable to handle payroll in-house. At that time they decide to go for outsourcing. Thus the time of outsourcing varies for every organization.
Payroll is considered as the non-core function of a company. You may be confused by this statement and want to go for debate. But let me clarify to you...
Managing Business’s payroll data and processing payrolls for all divisions of the business does not generate profit or revenue for an organization. It is just the back office activity which is essential but doesn’t differentiate your company from competitors. Thus payroll activity has the lowest value to your business. This is one of the main reasons more and more companies today are outsourcing services to payroll vendors.
Look at these five signs that may be the right time for you to outsource payroll.
When Payroll Is Costing You Too Much
You may think that managing payroll in-house is cheaper than outsourcing. But in reality, the opposite is true. You may need to hire a payroll expert to manage the payroll in-house. When you track the time spent by your payroll staff in payroll activities. You will find it lot more than you think. Also, you can compare the money spent by you on the plans payroll providers offer.
When you conduct an in-depth cost analysis, you will find that you are saving 20~30% expenses by outsourcing to payroll vendors.
When You Make Too Many Mistakes
Payroll is rewarding your employees accurately and on time. A mistake is the part and parcel of any job but you can’t afford mistakes in payroll as it would be very costly for your business. A small error in calculation causes the problem with your employees as well as government agencies.
Outsourcing payroll will relieve you of this calculation burden. Your payroll vendor will have a team of experts with the right technology to manage this complex function. Thus they will be less likely to make errors and provide you with much-needed peace of mind.
When Payroll Consumes More Time
As the organization grows managing payroll requires more time to process payroll. Not only the number of employees will go up but you require more attention to detail of enormous data during each pay period.
You need to spend more time entering a considerable amount of payroll data and processing payroll accurately during each pay period. This makes you more time from the core task that is helpful for the growth of your business.
Outsourcing payroll immediately frees up your time. They have payroll experts in their team and can manage complicated payroll also effectively and quickly.
When Compliance Is Overwhelming
With so many payroll regulations, hundreds of tax rules to be followed and documents to be filed for payroll. It’s a dream only to be compliant with the laws. But partnering with payroll provider relieves you from this headache.
Your payroll providers provide service to companies in this specific area so they keep up to date about the new tax laws and any changes in the existing laws. The payroll outsourcing vendor follows all the laws framed out for processing payroll.
Thus employees avoid compliance with all these regulatory mandates and much more productive in their current roles.
When Payroll Can’t be Processed Consistently
Paying your employees and tax authorities accurately on time is very important. If any error or miscalculation happens in payroll and salaries are not paid on time then this causes a dent in employee’s morale. Unhappy and demotivated employees may seek other options that may directly impact employee retention.
Outsourcing payroll makes you stress-free from paying your employees on time. This responsibility is being taken care of by your payroll provider. Thus outsourcing payroll streamlined your payroll process and makes your operational task hassle-free.
Expanding your business into foreign fields presents a wealth of opportunities. But as soon as you start hiring employees abroad global payroll processing becomes an important challenge for your business. Many businesses struggle to overcome this challenge.
You can meet this challenge by making the payroll team efficient. It is possible only when your team members are aware of global payroll processing.
More details about global payroll processing are below...
How does global payroll processing works?
Managing the entire organization’s payroll function for all locations via one system is global payroll management. View these basic steps as a roadmap for global payroll processing.
Before payroll calculation
- Get an employer identification number (EIN):
Before hiring an employee you need to get an employee identification number from the Internal Revenue Service (IRS). This number will be used on all business tax filing and forms and essential while reporting your employee information to state agencies.
- Get an employer identification number (EIN):
Choose a payroll schedule
- Select the right payroll schedule: There are four main schedules: Monthly, Semi-monthly, Bi-weekly, and Weekly. Keeping the cash flow for your business in mind select the one which is best for your business.
- Establish tax payment dates: After selecting the schedule set up a calendar for paydays
- Review employee hourly schedules: Get the employee hourly schedule, track their time, paid time off, verify it from the authorized person as per payroll policy.
- Determine overtime pay: Calculate over time as it will be helpful to pay the employee as per federal law. Overtime is generally paid one and half time then the employee’s hourly wage
- Calculate gross pay: Gross salary is paid whether an employee is working on a salary or hourly basis. If an employee is working on an hourly basis then the gross salary would be the number of hours worked in a given pay period multiplied by their hourly rate.
- Determine deductions: Deductions are those elements of the salary which are deducted from the gross salary. Each state is different and takes different taxes so find the state policies before you complete this step. Calculate the deductions such as
- Federal taxes
- Social Security
- State taxes
- Local taxes
- 401(k) contributions
- Workers' compensation contribution
- Other benefits
- Calculate net pay: The amount left over after subtracting the deductions from Gross pay is the net pay you have to pay out to each employee.
Net pay = Gross salary – Gross deductions
- Release Payment: As per the payment method agreed by employees, you can pay them via direct deposit or release paychecks or cash.
- Keep records of all the financial transactions for a specific period of time
- Be aware of potential miscalculations and mistakes
- Report your business’s taxes on a quarterly and annual basis
- Report new hires to the Internal Revenue System (IRS)
If you have decided to outsource payroll, then whom to render service is a challenge. We have researched and listed the best payroll provider to help you out the best fit for your business.
Which is the best payroll service Provider?
Paysquare is a one-stop solution for your HR necessities. Being expertise in the HRMS market, paysquare provides top-notch solutions to ease your HR staff’s work and provide a payroll service to all businesses like start-ups, mid-size and large enterprises. The best part with pay square is after hiring an employee you input the person’s basic information and paysqaure does the rest. Below are the criteria under which paysquare’s services are evaluated for the best payroll service provider.
- Cost: Pricing varies per size of your business, services you opt for and modules required
- Payroll processing: Manages all of your payroll processing
- Ease of use: Payroll information can be easily entered for payroll processing
- Customer service: Excellent customer service and responsiveness
- Paycheck options: All options like direct deposit, check or pay card are available
- Payroll tax: Handle all your payroll tax-related compliances.
- Mobile accessibility: Paysquare provides access to “myPayroll” through a mobile application
- Payroll reports: Provides detailed payroll reports
- Accuracy level: 100% in payroll management software functions
- Employee self-service: Employees can log in, enter their personal details, and see all their personal data
- Extra services: Along with payroll services, paysquare also supports Internal Payroll Management, Resource Management, Tax Filing, Generating Tax Reports, Income Tax Returns, and statutory compliances.
Outsourcing payroll is like handing your baby to another person which is very painful. So try to manage payroll in-house as long as you can.
When you see that the in-house team is not able to process payroll efficiently. At that time you can outsource this service to payroll providers whom you feel capable of handling payroll and payroll tax needs as per your business requirements.
If you are looking for a credible outsourcing partner for the long term then contact Paysquare in Pune, they will relieve you from this burden and provide you a hassle-free solution.