What is Payroll Outsourcing and How Could It Help You?

Payroll refers to employees’ payments, which encompasses the sum of all the financial records of salaries plus bonuses, taxes, and deductions. It is the amount paid to the employees for the services they render over a particular period. Payroll functions are generally outsourced to reduce cost and save time dealing with financial tasks. Employing an external firm to handle payroll-related activities means your organization can do away with the needs of hiring and training a large in-house team, installing required software packages, constantly staying updated about complicated tax regulations, etc. Payroll outsourcing may occur within the country or internally too.

HOW DOES PAYROLL OUTSOURCING WORK?

In the General Process, Payroll Outsourcing Covers the Following Activities:

Payroll outsourcing includes all the activities associated with payroll processing and all other payroll-related functions. It also includes maintaining employee records, calculating employee compensations, and computing bonuses alongside distributing payroll, generating payroll-related reports, and complying with the government’s taxation laws.

WHEN TO OUTSOURCE PAYROLL?

From the number of employees and local entities and the complexity of the host country’s laws pertaining to employment and withholding, the question of when to outsource payroll depends on many factors. In cases where the time and cost of setting up and administering local payrolls aren’t justified, it gets outsourced to another firm. Companies can customize payroll services that they outsource while retaining control of other aspects based on their requirements.

The Payroll Functions Outsourced to Third-party Providers Include:

• Running payroll.
• Withholding calculations.
• Depositing funds and issuing checks to the employees.
• Filing government reports.
• Administering employee benefits and pension contributions.

Payroll outsourcing providers with technological and expertise produce accurate, timely results offering other features such as payroll tax filing, employee recordkeeping, new hire reporting, client support, wage garnishment processing, etc. Thus, it is time to start payroll outsourcing if you think the above-mentioned would benefit you.

HOW TO CHOOSE THE RIGHT PAYROLL OUTSOURCING PROVIDER?

Knowing what to look for in a full-service payroll service provider can help smooth transition and minimize employee disruptions. It is recommended that you determine requirements, address compliance, and evaluate vendor history to ensure successful payroll outsourcing. You can also look at peer reviews and secure stakeholder buy-ins.

WHY OUTSOURCE PAYROLL?

WHAT ARE THE BENEFITS OF PAYROLL OUTSOURCING?

Payroll outsourcing helps you save time and money and lets employers focus on business growth initiatives. It improves accuracy and helps prevents costly penalties as well. Moreover, full-service payroll providers also offer flexible payment options that can help improve employee satisfaction.

Access to Advanced Technology and Experts

Partnering with payroll providers equipped with the latest technology and payroll experts can help efficiently manage and regulate all your payroll activities hassle-free.

Cost Savings

Payroll outsourcing often helps firms save money compared to carrying out the task in-house. It means investing in the necessary equipment, accounting software, and training to ensure that payroll is processed correctly. Moreover, employers need to stay updated on changing tax rules and accounting deadlines. Outsourcing is cost-effective as you can save a lot of money that goes into manual timekeeping.

Saves Time

Irrespective of the number of employees your organization consists of, payroll processing could be time-consuming and demand a lot of attention. Processing payroll in-house means you need to input extensive payroll data. Considering the number of hours spent processing and managing it, payroll outsourcing can help you save a lot of time.

Improved accuracy & employee compliance

Handling payroll in-house can be risky given the level of personal data required, and having a provider on hand can help you feel more confident about staying up to date on regulations. Outsourcing payroll can be quite beneficial when generating results with maximum accuracy. Dedicated and highly skilled staff can handle payroll services smoothly and efficiently.

Enhanced Security

Since payroll processing is a complex and potentially risky business operation, it is prone to the risk of identity theft, embezzlement of funds, tampering with files for personal gain, etc. Using in-house payroll software also is an evident risk. Moreover, you might not have the time and energy to supervise your business’s payroll closely for time and rate abuses and unethical activities. Payroll outsourcing service providers have technologies that spot and alert clients to all kinds of payroll fraud and offer a safe “haven” for all your confidential payroll data. Quality payroll providers are well-equipped with systems for storing and protecting data too.

Focus on Core Business

Since payroll is a non-core function, outsourcing it to a third-party expert can let you use your time better and focus on your core business or revenue centers such as sales and marketing. A professional payroll service provider helps you eliminate the hassle and pain associated with processing payroll. Just provide the basic information, and your payroll service provider takes care of everything else and guarantees error-free payroll and tax filings and payments. With no headaches or hassles, you’re left to focus on running a profitable business. A clear, focused mind is undoubtedly one of the actual benefits of payroll outsourcing.

Avoid Penalties

It is estimated that 40% of small businesses pay an average penalty of $845 per year on incorrect payments and fillings. Penalties for omissions, late payroll tax fillings, errors, etc., can cost you a lot. Such mistakes are costly, but they are also painful and anger employees and post red flags to the IRS. Mistakes can lead to audits and penalties that no business looks forward to. Keeping abreast of all regulation changes, including state, federal, local, and industry-specific, can be challenging. Still, a reputable payroll provider with dedicated staff can help you stay up to date on all the changes that could affect your payroll and ensure that your organization stays compliant.

HOW MUCH DOES PAYROLL OUTSOURCING COST?

If you are thinking about outsourcing payroll, you might be wondering what it costs. And the short answer is that it is surprisingly affordable! While payroll outsourcing generally depends on the frequency, the total number of employees, and the specific services that need to be outsourced, it should cost you way less than what it takes to have an in-house payroll team, even though it involves a processing fee and an annual base fee.

QUESTIONS TO ASK WHEN OUTSOURCING YOUR PAYROLL?

• What is your experience in managing payroll?
• What are the basic and add-on services you offer?
• Do you calculate tax withholding for every employee?
• Can your payroll system handle all our essential employee records?
• How do you guarantee data security?
• How transparent is your pricing structure?

Must Read: The Ultimate Guide for CPAs to Decode Payroll Outsourcing Services

WHY OUTSOURCE YOUR PAYROLL TO QXAS?

• Over 14 years of experience delivering outsourced payroll solutions
• Specialization in catering to high-volume payroll processing requests. Have processed over 1,000,000 timesheets annually
• First GDPR compliant payroll outsourcing company in India which is also affiliated with prestigious accountancy organizations like ACCA & ICAEW
• Fully compliant: ISO 27001 certified for information security and ISO 9001 for quality
• A highly trusted and successful Payroll outsourcing company with highly efficient, resolute, and experienced accountants