Top Reasons You Should Outsource Payroll

outsource payroll

If many hours of work can instead be assumed by third-party employees somewhere with a lower cost of living, the outsourced functions tend to become cheaper to perform. In this guide, we will explain what it’s like to get started with an outsourced payroll provider and how payroll is managed over the long term. Relying on an external vendor does not mean that you forget about your payroll, as you should make sure that you agree on a strong process that allows you to exchange payroll-relevant data with the partner monthly. You will need a process that ensures all payroll changes, and information on joiners and leavers, are collated on your side, and communicated effectively and on time to your payroll partner. Your payroll partner does the rest, and will advise you on local regulations and deadlines, but you need to ensure building a strong relationship with them. As you will see below, this makes a lot of sense when you venture into new countries.

In many ways, it is now easier for employees to move on if they are not happy. A smooth payroll process contributes to employee engagement and satisfaction by always ensuring people get paid accurately and on time, and by enabling easy, secure access to guidance and documentation. In addition to payroll outsourcing, Horizons can become the Employer of Record, or ‘Global PEO’, for your international workforce, taking over all employer obligations and liabilities on behalf of clients.

  • The key here is to ask what is and isn’t included in the price quote to eliminate any surprises.
  • Not having to spend long hours on administrative work affords employers the ability to focus on business growth initiatives, and improved accuracy can prevent costly penalties.
  • You need a partner that provides a responsive single point of contact, wherever you are in the world.
  • Managed service – partner – in this model, a single payroll outsourcing provider takes on complete responsibility for global payroll delivery in every country the organisation operates in.

A good provider will make things easy for the client, but client companies shouldn’t be lured into a false sense of security. Take the time to make sure a provider is both trustworthy and experienced to minimize these inherent risks of outsourcing. This is another area where a misstep by a payroll outsourcing provider can lead to problems for both the provider and the client.

In a nutshell, Multiplier simplifies complex payroll and tax payments for companies, saving a great deal of time and resource use at large. The platform makes it easier to keep track of payments and approve and pay employees working for firms from anywhere in the world. Another way to ensure the services provided are good is by requesting customer references to whom you can talk.

Other companies that provide multi-country payroll services to medium and smaller entities include KPMG, EY, Deloitte and PwC. Each has a service that is standardised in many countries and will ask for similar data exchange. There are many factors to consider when deciding on payroll outsourcing services, such as time to implement Journal Entries Examples Format How to Explanation and return on investment. That’s why we’ve come up with a list of potential pros and cons of outsourcing payroll services to consider before making your final decision. Additional factors that influence payroll outsourcing costs are headcount, payroll cycle, and the range of services required by the organization.

Escalation efficiency – another pain point is the difficulty faced in escalating an issue to higher levels in the payroll outsourcing vendor. Escalation procedures in the vendor company can be slow and inefficient, and the issue may become a crisis before help can be engaged. Organisational change – company strategy changes; what worked for you last year might not necessarily be right for next year. The company could be subject to a merger or acquisition, there could be changes in senior management, there might be a group-wide roll-out of a new IT system that renders existing payroll software useless.

Before we get into how you will choose what the best payroll outsourcing option is for you, it’s important to understand what your options are. Additionally, some companies are subject to tax penalties due to mismanaged payroll administration. These can be costly by themselves, and they end up costing even more when you factor in lost time spent dealing with an audit or penalty. This approach is good for businesses with fairly predictable payrolls that don’t have a lot of changes or extra payroll runs.

Payroll for Small Businesses: Challenges and Solutions

Worst of all is the tax remittance, which involves a heavy penalty if it is paid even one day late. All of these problems and costs can be avoided by handing over the payroll processing function to an outside supplier. Therefore, it is crucial to choose a payroll company with a price that is in line with the organization’s budget when selecting a global payroll provider. Is there any aspect of payroll, tax, and employee benefits management that you know you want to keep in-house? Be sure to answer these questions as you look for the right payroll service provider for your organization.

outsource payroll

Companies outsourcing internationally should not assume they can ignore employment regulations in the provider’s country, since these can be very different from those in the United States. By outsourcing payroll, you are giving up direct supervision of at least some of its processes. Even though a client company is responsible for setting expectations and monitoring a provider’s performance, there’s no substitute for the level of oversight achievable by managing payroll functions internally.

Consider hiring a full-service company who prepares union reports and others as needed. Ideally, you need to be working with an outsourcing payroll partner you can trust to get on with the job and get it done right; someone you can call on for help when it’s needed. You need a partner that provides a responsive single point of contact, wherever you are in the world. Direct access to the country subject matter experts and management is a huge positive. Managed service – partner – in this model, a single payroll outsourcing provider takes on complete responsibility for global payroll delivery in every country the organisation operates in.

Outsourcing Payroll Duties Can Be a Sound Business Practice, but… Know Your Tax Responsibilities as an Employer

Even with the most trusted employees, business owners should be cautious. In-house payroll software is also something you need to be careful with and do your research to see how secure your payroll data really is. Choosing to outsource payroll with a reputable company can make you feel assured that your confidential payroll data is secure at all times. If you’re looking to outsource your payroll operations, check out our global payroll services.

Inaccurately filed federal payroll taxes may result in penalties and legal issues with local government agencies. Outsourcing payroll to a stable, experienced provider can offer a “safe haven” for your confidential payroll data. In addition to redundant backup and multiple server locations, a quality payroll provider invests in state-of-the-art systems for storing and protecting data, simply because it’s part of the service provided to clients. These mistakes can lead to audits and penalties — situations no business wants or needs.

Top reasons to outsource payroll

As you can see, there are many factors that can impact the total cost of payroll processing. While the general rule of thumb is that it will cost around $200-$250 per employee per year, your total price will be based on the scope of your engagement with your vendor. Since there’s so much variability in pricing, you may be wondering if there are ways you can save on payroll costs. The quest for less expensive options has fueled the rise in popularity of Do-It-Yourself (DIY) online payroll software.

Compliance is key – when partnering with a payroll provider, you are putting your trust in their ability to remain compliant with local regulations. While responsibility for tax compliance and other filings may shift to your provider, the penalties for non-compliance stay with you. Payroll outsourcing may occur within country (domestic payroll processing), or internationally (global payroll processing). It is important for the right global payroll partner to stay up to date with changing regulations.

outsource payroll

It means that these professionals can focus on other important accounting tasks, such as reviewing finance reports and resolving any accounting issues that may arise. A reputable payroll and HR provider can handle tax filing and payments for you. A company operating this kind of compliance will also stay up-to-date on tax regulation changes. E-signature technology provided by a payroll and HR solution can save an organization up to 40 working hours per month. If you multiply 40 hours by the $23 average hourly rate of pay for a payroll or HR personnel, that’s a yearly savings of $11,040.

Payroll and HR

PEOs are suitable to businesses of all sizes as they have the flexibility and expertise to handle the different legal jurisdictions and tax laws. Full-service payroll companies have broad experience with running payroll and ensuring tax compliance for businesses. If you’re hiring internationally, look for a global payroll provider like Deel that can take on the responsibility of navigating unfamiliar payroll laws and best practices for you. In this article, we explore the benefits of payroll outsourcing and explain how to choose the right payroll service provider, so you can make payroll processing more cost-effective and straightforward for your team. Not having to spend long hours on administrative work affords employers the ability to focus on business growth initiatives, and improved accuracy can prevent costly penalties.

It saves you money.

Each year, the IRS assesses millions of dollars in employment tax penalties. Having a provider who acts as your payroll tax compliance partner and expert is vital to mitigating that risk. Most payroll service providers stay up to date with the latest technology because it allows them to take their service to the next level and provide the best for their clients. This includes automation and AI capabilities, which allow payroll professionals to focus on optimizing your payroll system, ultimately making it more efficient and reducing human error.

How to continue employing people who want to move to another country

Your payroll partner should provide support to ensure you have everything ready for the transition. At ConnectPay, we understand this is a business-critical event, which is why we have a specialized onboarding team that works with every new client. This team eases the transition process and ensures all of the correct information and data is uploaded into the required systems.

These two factors are less critical for smaller businesses, which therefore form the core group that outsource payroll. Larger companies are more likely to retain payroll in-house, since they can process payroll at lower cost than suppliers, and can retain payroll information within their computer systems. Large payroll suppliers will respond to unemployment claims on behalf of the company. This involves the complete range of activities from initial claims filings through final disposition of the claims.

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