As businesses continue to expand, owners are seizing every opportunity that may help them improve and quicken internal processes. One of those is outsourcing. In the fast-changing business world, choosing to outsource finance and accounting services is seen as an effective way to cut costs, provide on-time compensation for employees, and keep business records organized. Given those advantages, more and more businesses trust outsourcing companies in handling their finance and accounting requirements especially payroll.
What is payroll outsourcing?
Payroll outsourcing is the enlistment of a third party provider that will manage the administrative and compliance functions of paying employees. The primary advantages of doing this are:
- Cost Savings – This lets the company avoid the need of using in-house resources (such as electricity, appliances and internet) to comply with complex payroll
- Easy and Quick Administration – Business owners can have fast transactions and less stress. Detailed reports that comply with the latest legal standards are also guaranteed.
- Reduced Mistakes – With the knowledgeable and updated staff of outsourcing companies, computation mistakes and tax compliance penalties are avoidable. Part of their rules is to have every process pass through numerous reviews to ensure that there are no financial discrepancies.
What are payroll functions that can be safely outsourced?
Depending on the needs of a specific business, one or more aspects of the payroll can be handled by third-party providers. These are the following:
Competent bookkeepers and accountants are hard to find especially when there is a skill shortage in a country. Fortunately, reputable outsourcing companies are abundant in talents who are updated with the latest labor laws, tax changes and financial software or are willing to relearn and update their skills at short notices. They are versatile in different aspects of finances including balancing accounts, keeping records, managing payroll and delivering financial reports.
- Full-Service Payroll
A full-service payroll provider will manage the payroll for you, end-to-end. This includes running payroll, depositing funds or issuing checks to employees, calculating state and federal taxes, filing required government reports, administering employee benefits, withholding pension contributions and insurance payments.
- Payroll Software
Some outsourcing companies provide advanced payroll software. The only downside is that this tool requires the involvement of business owners in each pay period. With the payroll software, you have to manually input data such as working hours, leaves and incentives. Then, the processing/calculations of data are automated. It’s beneficial as it helps bookkeepers and accountants to ease their works.
- Professional Employer Organization (PEO)
A professional employer organization offers full-service HR (human resources) and payroll. All people-related processes such as finding employees, providing health insurance benefits and managing payroll data and taxes are all covered. This function lets you hire an all-around team of professionals that will serve as your finance, accounting and HR department.
Payroll outsourcing provides a wide array of functions that can help businesses improve their internal financial processes. By availing these functions, business owners like you can have the chance to focus more on other core aspects of the businesses such as sales, marketing, operations and customer service.