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Your payroll administration has not been smooth lately. There have been disruptions in pay cycles, inaccuracies that you are unable to account for, so on and so forth. That’s when someone today you that outsourcing payroll may be a great idea. But what exactly is payroll outsourcing and why do people outsource payroll. Let us look at this in more detail now.
What is payroll outsourcing?
Looking for payroll outsourcing services? Here’s what it means. Entrusting an external payroll administrator with the task of handling your payroll rather than handling it in-house is called payroll outsourcing.
You derive great value from payroll outsourcing when you are trying to manage the payroll services of a global organisation, complete with its many branches worldwide, the different languages, currencies and local tax laws and compliances. Managing all this in-house already seems like a headache, does it not?
Top 6 Reasons to Outsource Payroll
There are several reasons for outsourcing to payroll service providers. While we cannot discuss all of them, here are a few of them:
1. Saves you time
When you outsource your payroll to an experienced payroll partner, they can help speed up the payroll process end-to-end, leading to a massive reduction in time and effort. This is biggest benefit of payroll outsourcing services.
2. Saves you money
The cost of incorrect payroll is a lot of money, spent to remedy compliance or to correct any mistakes committed in-house or to address lawsuits, resulting from employee complaints on the payroll process.
3. Ensures security of payroll data
If you outsource your payroll to a trusted payroll service partner, then the security of your payroll information is ensured, and your payroll data remains secure throughout the entire payroll process. No risk of loss or breach of data.
4. No worries about tax compliance
Tax compliance worries are a thing of the past. The payroll partner will decide what tax rules to follow and how to implement them with regard to payroll. Tax rules will be different in different geographies and especially when it comes to remote employees, managing this can be difficult, but a payroll partner can greatly simplify it.
5. No inaccuracies in payroll
Payroll inaccuracies are a thing of the past. The payroll process is highly streamlined, with salary credits happening accurately and without delay, the tax deductions being the right amounts, and the benefits accrued being accurately credited on time.
6. Facilitate employee self service
Employees can today use the payroll system to view and download their salary slips, read the policies related to payroll and even offer suggestions on how to improve the payroll system all through an online self-help portal.
What features do payroll outsourcing service providers offer?
1. Third-party integrations made possible
Integrations of payroll with accounting and other systems will help to match the payroll and the bigger ledgers maintained by the accounting teams to ensure that the payroll and accounting teams are on the same page and the book of accounts match.
2. Tax filing for payroll
Tax filing as a part of payroll ensures that the tax filing is done accurately. If the tax has been deduced by moving to another regime or a special plan, then this needs to be done in a different way.
3. Employee self-service portal accessible from anywhere
The employee self-service portal can be accessed from anywhere with a valid username and password, which enables transparency and allows employees to play a key role in the evolution of payroll in the company.
4. Year-end processing, including tax statements
Tax statements, which report the employee salary and the withholdings, help clarify to the authorities that you are compliant with tax regulations in place and that you treat all your employees fairly and compensate them as promised. This is another crucial benefit of a payroll outsourcing service.
5. Reimbursement for vehicle and other benefits etc.
The payroll system must also enable the reimbursement of money towards vehicle allowances and other benefits, ensuring that employee needs are met as promised. Such reimbursements could be of great help to the employee when they are in need.
6. Payroll reporting with customizations
Reporting on the payroll helps to understand the process better, know if it is happening in the right way and see what must be done to improve it. Customizable payroll reporting will allow stakeholders to view data in different ways, gaining insights from it.
7. Maintaining employee records with proper access control
Employee records for payroll must be maintained with absolute sanctity. This can be done by enforcing access control for each record and allowing only certain people in the HR team itself to access the records.
8. Reporting of new hires and exits
Every time a new hire is added to the payroll, a check must be done to ensure that the employee has been assigned to the right income bracket and that the benefits for that income bracket and as provided for in the appointment letter are provided and appropriate deductions are made.
9. Accessible relationship manager and customer care
The relationship manager from the payroll provider must be easily accessible and the customer care must be available too 24×7 to resolve any queries regarding payroll and payroll compliance.
How to choose a provider for outsourcing payroll?
1. Your business needs
As a business, you must be aware of your needs. What does your business expect from a payroll provider? How distributed worldwide is your workforce? How many employees do you have? How many sectors do you operate in? All these will affect the choice of the payroll provider.
2. Integration with other services
Does the payroll system provided by the payroll provider integrate well with the systems you have in place for accounting and employee management (probably an ERP)?
3. Pricing of the services and technology
How costly or cheap are the services provided by the payroll partner and is the technology provided by them easy to use and implement in daily activities associated with payroll? Do they provide any additional training to get the payroll process implemented properly?
4. Option for customer care
How easy or difficult is it to reach customer care when you are struggling with issues in payroll and is there a relationship manager present?
5. Reputation
How popular is the payroll service provider, and how many people have attested to their delivery of a good service? You can gauge this by looking at the reviews on Google, Facebook, Linkedin and other social media sharing sites.
6. Compliance management
Are they on point in compliance? Do they manage all aspects of compliance with respect to payroll and have they enough stakeholders to manage it properly and what techniques do they use to maintain it?
Why outsource your payroll to ALP?
Alp Consulting is an HR partner of great repute, operating in the HR sphere for over 25 years now and serving several Fortune 500 companies, many of whom are distinguished players in their sectors. We provide recruitment and staffing services in addition to a streamlined payroll system and easy compliance management. We can help get your payroll process on track and ensure that it is compliant and 100% accurate.
Frequently Asked Questions
How does payroll outsourcing work?
In payroll outsourcing, first the client and the provider will discuss the business needs, then the provider would inspect the case and suggest a solution. In the next step, the client will decide if the solution is within their budget or not and suits their needs. Once accepted, it will be signed into contract and the service is continued for the duration of the contract.
Is payroll outsourcing a good idea?
Payroll outsourcing is a good idea, even for start-ups and smaller businesses who may not have the money to spend on it. This is because the cost of a poorly managed payroll system is too high to manage.
What are the advantages of outsourcing payroll services?
The benefits of outsourcing payroll are faster turnaround times, reduced investment, accuracy in payroll, easier and faster compliance management, and safety and privacy of employee data.
How much does it cost to outsource payroll?
This is something that varies greatly and would depend on how big or small the company is, where the workforce is located, whether you wish to integrate the payroll system with an existing solution, and what the frequency of the payroll cycles are. In short, there is no definite answer.
