Although payroll processing is a non-core business function, it is regarded as one of the most important. It involves collecting your employees' work hours, calculating their salaries and wages, and issuing paychecks or transfers. It also involves ensuring that your workplace adheres to local and federal requirements, such as tax withholding, benefits, and health care deductions, which makes the role of a payroll specialist crucial to any organisation.
Outsourcing is being favoured more and becoming mainstream due to COVID-19 disruptions. Now, many businesses are switching from in-house payroll professionals or bookkeepers to third-party companies. This way, businesses can benefit from professionals' expertise while saving time and resources and using them on core business functions.
In this post, we'll share the main benefits of outsourced payroll solutions so you can decide which bookkeeping option works better for your organisation.
The Top Benefits of Outsourcing Your Payroll Services
Any typical business that has employees has a payroll process. However, most small businesses either don't have a payroll specialist or carry out the task themselves. Payroll outsourcing is typically performed by a bookkeeping or accounting firm full of payroll specialists, financial consultants, and accountants that help businesses by;
• Acquiring necessary employment and business information
• Ensuring all essential registrations are in place
• Processing payroll at specified intervals
• Creating financial reports for clients while remitting taxes and contributions regularly
• Managing deductions, such as taxes, health insurance, and compensations
Although traditional in-house payroll processing still works, the following are the major benefits of outsourcing your payroll services:
1. Cost Reduction
Perhaps, the biggest benefit of outsourced payroll solutions is cost reduction, especially for small and medium-sized enterprises. Payroll processing involves investing in several things, including hiring and training professionals, payroll or accounting software, printing checks, and keeping up with the regulations. Therefore, hiring a bookkeeping firm may be more cost-effective, especially when using the saved amount in other core activities.
2. Regulatory Compliance
One of the biggest issues small businesses face in complying with their industries' governing laws and regulations. By outsourcing your payroll, you're hiring a team of experts who have an in-depth understanding of all the regulations in Australia. They are on top of all labour, tax, insurance, and immigration laws.
3. No Infrastructure or Maintenance Costs with Real-Time Accessibility
You don't have to invest in any hardware or accounting software or deal with annoying upgrades and maintenance by outsourcing your payroll processing. More importantly, outsourcing allows many companies to eliminate their technology limitations as many third-party payroll services use the latest tools and digital technologies to enable real-time access to information at any time, such as:
• Invoice and payroll reports
• PTO tracking
• Benefit plans and documents
• Performance reviews
• Training records
• Benefits enrolment
• License and certification tracking
4. Enhanced Security
Payroll processing can be a complex process involving several risks, including theft of personal information or money. Even if you believe your employees are trustworthy, you cannot solely rely on faith and must monitor every process to ensure security. However, when you outsource payroll processing to a professional bookkeeping service, you're also delegating accountability, meaning the solution providers are liable to have security measures in place to prevent fraud and minimise manual interventions.
5. Minimal Risk of Payroll Delays or Disruptions
Outsourcing payroll functionality can help businesses streamline payroll processes without delays or disruptions, such as a payroll employee quitting at the end of the month or getting sick. Disruptions can also occur in the form of IT downtime or hardware failure, which can cause processing delays. Although no system or service can promise 100% reliability, outsourcing payroll processing to a reputable company means that you're covered in every aspect, from quality assurance to deadline, thus, justifying your investment.
Whether you're managing 20 or 2,000 employees in your organisation, handling payroll processes is no walk in the park. Every day, your payroll employee or team has to look into several intricate details like terminations, compliance changes and regulations, terminations, new hirings, and benefit deductions, to name a few.
Ultimately, the decision to stick to traditional in-house solutions and opt for outsourcing depends on your company's specific needs. Overall, outsourcing payroll processing is a cost-effective solution that can be a game-changer for many small businesses and startups or growing businesses looking to expand into new markets with different rules and regulations.
This is branded content from Gecko Bookkeeping.