Although time-consuming, payroll is a critical part of any business operation. While some businesses opt to manage payroll functions in-house through manual bookkeeping, successful businesses world-over are opting to outsource this function to professionals.
What Exactly is Payroll Outsourcing?
Payroll outsourcing is a process in which businesses hire an external firm to manage all payroll functions to help them save time, money, and effort. Outsourced payroll solutions provide increased accuracy when compared to in-house payroll management as it gets prepared, analysed, and evaluated by qualified professionals.
Ideally, payroll outsourcing achieves three key goals –
Frees up both time and resources allowing businesses to focus more on core tasks.
It reduces costs and risks involved.
Gives businesses access to the latest technology and expertise to perform payroll functions well.
Let us discuss these benefits in more detail and understand what they mean for businesses.
Benefits of Outsourcing Payroll
Having your payroll process outsourced to a qualified service provider can take a huge burden off your shoulders by providing the following benefits –
Enhanced Productivity/Time Saving
Managing payroll processing in-house is an extremely time-consuming process and requires a lot of resources, manpower, and attention to detail, leading to lost productivity. Further, time spent on accurate payroll management, involving huge amounts of data, translates to considerable time taken away from the core tasks of the business.
Outsourcing payroll gives business owners and the HR teams a lot of time to focus on the other important tasks for the growth and expansion of the business.
For any business owner, time is the most important commodity with a monetary value that is linked to the revenue that the business generates from the tasks they handle. The more time they are able to save each day, the more money is earned.
When it comes to the cost component involved in essential payroll tasks such as calculating employee hours, paid time off, deductions, leaves, generating reports, printing & distributing paychecks, and preparing tax filings, the overall value is huge.
By outsourcing payroll processing to a third-party, you can ensure that everything from handling payroll inquiries to calculating payroll taxes and statutory filings is managed seamlessly in a cost-efficient manner. If you look at the total time spent on in-house payroll management each pay period compared to the costs of outsourcing, you will see a great deal of cost savings when you take those tasks off your internal list.
Advantage of the Latest Technology
With rapid technological advancement, an increasing number of advanced global payroll providers are using cloud-based systems to manage business data and have better visibility and transparency in payroll processing along with robust data integrity.
Outsourcing payroll also allows you to leverage the benefit of upcoming technologies such as robotic process automation (RPA) used by specialist payroll service providers in order to optimize processing, leading to enhanced accuracy and timeliness of the process. Professional payroll service providers such as PeopleStrong use many such latest payroll technologies to seamlessly manage payroll outsourcing.
A lot of small business owners struggle when it comes to handling complicated government tax regulations related to payroll. With a number of complex rules, employee benefit mistakes, multiple by-laws, PF percentages, and taxes to consider, it becomes difficult to process salaries and reimbursements of each and every employee in the organization. These mistakes can quickly snowball into audit irregularities and penalties that every business would want to avoid.
Professional payroll service providers, on the other hand, have the required expertise and are always abreast about the latest compliance regulations, and tax rate changes. They also have dedicated staff to help companies meet all the regulatory updates.
Enhanced Data Security
There are a number of risks associated with in-house payroll management, such as the safety of server/network, embezzlement, identity theft, and more. Further, there is always a risk of data mishandling when an increasing number of employees are working from home in current times.
Professional outsourced payroll service providers ensure to protect and store all your important data on highly secure cloud-based servers and leverage the latest encryption technology to keep your information safe.
Payroll is one of those critical business functions that may not directly impact the business. But if carried out inefficiently, it can harm the overall business disastrously.
A qualified and professional payroll service provider specializes in multiple functions of payroll management, including compliance, complexities of regulations, taxes, and human resources. At PeopleStrong, with the experience of managing payroll for 100+ customers powered by strong technology backbone, we have achieved payroll accuracy of >99.8%. Outsourcing payroll functions to such trained professionals can lead to enhanced business productivity, and you can shift your entire focus on growing your business.