Payroll can be a messy and stressful affair when you have to manage large employee groups. It requires the organisation to track an individual employee’s payroll record, make statutory deductions and tax filings. By outsourcing these tedious but crucial payroll processes, business leaders can free up valuable time and resources to focus on strategic business initiatives.
What is payroll outsourcing?
Similar to most jobs today where there are tools or software that help to do the work, there are also specialists who take payroll off your hands. These payroll providers are proficient in the entire payroll processes, from calculating pay and overtime to disbursing pay into your employees’ bank accounts and filling the necessary tax obligations. At the same time, they may just do part of the job, depending on what you need and can afford.
When is it time to outsource your payroll?
Making the switch from manual payroll to an external payroll provider can be a tough decision. Here are 3 major telltale signs that your organisation is ready to upgrade to an outsourced payroll provider.
Your headcount is expanding
Managing payroll during the initial phase of setting up the business is fairly straightforward. After all, the number of employees tends to be small. As your business expands and you add employees, it becomes less justifiable to run payroll manually. While most businesses typically use Excel spreadsheets to calculate pay, it may not be as accurate when payroll deductions and taxes are taken into consideration. Eventually, running payroll manually for a large employee headcount becomes too laborious and may result in payroll inaccuracies in the long run.
Payroll outsourcing providers offer solutions and technology that are necessary to ensure accurate and timely payroll results. These may even include a platform that integrates with your existing accounting system, support multiple pay options such as direct deposits into local and overseas bank accounts as well as employee record keeping.
You find it difficult keeping up with ongoing changes in pay regulations
Keeping up with changes in payroll regulations and tax obligations seem manageable when you only have a few employees to take care of. However, when your business starts to venture into new markets or engage part-term employees and contractors, that’s when payroll processing becomes more complex. On top of the different local payroll regulations in each country, pay calculations also differ depending on the local market’s labour laws.
Payroll outsourcing providers are set up to handle these complicated payroll matters. These specialists are well-trained in tackling the ongoing changes in labour laws or payroll regulations in each city or country. When you need support, these payroll providers can help to ensure timely and accurate payroll regardless of country or employment type.
You are spending too much time on payroll
Time is an extremely valuable asset in the business world. While small businesses are agile and able to adapt fairly quickly with changes in the environment, large organisations may not be able to adapt as swiftly. If you find yourself spending too much time on payroll processes at the expense of other core business functions, outsourcing payroll may be the best solution.
There are no doubt pros and cons to outsourcing your payroll function. Engaging a payroll outsourcing vendor can help to drive operational efficiencies and free up valuable time and resources. However, it may be a costly investment to some organisations. Ultimately, it boils down to what your organisation needs. Before partnering with a payroll outsourcing vendor, it is always best to do your own homework and ensure that the vendor is capable of meeting all your requirements.