8 Reasons Businesses Should Outsource Payroll Processing

If you are a business owner, who is serious about expanding your business by focusing on your core operations and other critical operational aspects, then you need to be able to free your mind and plate of payroll responsibilities. Handing over your payroll needs to an expert third party payroll outsourcing services  with a proven record and good reputation in the industry is what you must be doing. Outsourcing your payroll to an external payroll service provider who will take care of your organization’s payroll management and diligently carry out all the payroll functions including wage calculations, tax withholdings, reporting etc is the ideal solution for tackling your payroll challenges. 

What is Payroll Outsourcing? 

Payroll Outsourcing is a process where a business hands over its payroll responsibilities to a third-party payroll service provider, to allow themselves the time to focus on their core operations that have a direct impact on profitability. The third-party external payroll company will ensure all of the payroll tasks are taken care of, including calculation of wages, deductions, payslip distribution and processing of payments on behalf of the business owner/ employer, unburdening them with respect to payroll duties. 

Why Outsource your payroll processing? 

Although businesses do realize how tedious it is to process payroll in-house, most of them still wonder if it’s worth it to outsource payroll, as it would incur extra costs. But in reality, outsourcing your payroll to a third-party provider helps you cut costs associated with payroll processing and reduce compliance risks. Additionally, it also saves you a ton of time as the external payroll company takes care of all the time-consuming tasks like data entry, tax filing and other paperwork. 

Businesses must remember that processing payroll is complex, labour-intensive, requires dedicated staff and a ton of resources if done in-house. Outsourcing it to an external expert payroll company, not only helps ensure accuracy, improved data security, human resource management, streamline payroll processing, compliance management and offers a better employee experience but also frees up your time to focus on core business activities. 

 Top reasons why you should outsource your payroll processing

There are various reasons why you should consider Outsourcing payroll processing to an expert payroll services provider. Some of the top reasons are- 

1. Expertise

An external payroll services company will have a team of experts that are knowledgeable and are well versed in processing payroll, manage payroll accurately and efficiently, eliminating errors, saving your time and money. 

2. Saves time

Even if you do have a HR and payroll team in-house, that is capable of processing payroll, outsourcing it to a payroll services provider is better as it can help the team take payroll off their to-do list and focus on creating and developing strategies and come up with initiatives that could help grow the business, like sales, customer services etc. 

3.  Minimizes payroll errors

Payroll errors are more common that you think, especially if you are doing it in-house. Payroll providers, however, automate most of the aspects of payroll that are repetitive, labour intensive and time-consuming, reducing the mistakes that result in manual calculations. 

4. Improved Data Security

Outsourcing payroll to a reputable third-party payroll provider that utilizes state-of-the-art technology, redundant backups, and multiple server locations that can help employers safeguard their confidential data.

5. Compliance upkeep

Labour laws and regulations keep changing and its important to stay updated about the changing regulations in order to maintain compliance. Not only does a third-party provider help with this but also helps fill out important paperwork required for compliance maintenance. 

6. Improved data accuracy

A payroll service provider facilitates integration of data. When payroll is fully integrated with time and attendance, benefits, and other HR applications, it enhances data accuracy and simplifies information access through single sign-on.

7. Employee self-service portal

A reliable payroll processing provider offers you with an ESS portal that typically is designed for employees to have easy access to certain important information. They can view their profile, view their payslips to understand the breakage of taxes and withholdings etc. 

8. Reduced costs

While payroll providers do charge a fee, outsourcing payroll can save businesses money when compared to the costs of fines and penalties resulting from mistakes and noncompliance leading to damage of brand reputation. 

What are the features you must look for when you outsource your payroll?

When you decide to outsource your payroll services, there are a few things you must consider before doing so. First of all, make sure that the payroll provider is reliable and holds a good reputation. Ensure that they are aware of the latest technology required to process payroll in an accurate and timely manner. 

• The payroll processing must be able to integrate with an accounting or in-house financial system, if required
• Must carry out the tax filing process
• Has an employee self service portal that is user friendly and is accessible at all times
• Payment of salaries through direct deposits, cheques or paycards
• Year-end processing including tax statements and form 16 
• Payroll analytics and reporting
• Employee data record maintenance
• New hire reporting
• Wage garnishment processing

How to choose a payroll provider to outsource your payroll? 

Before you start looking for your ideal payroll partner, its important to establish your needs first. When you have defined your requirements, looking for the right payroll provider who will seamlessly process payroll with minimum disruptions and chaos is easier. 

1. Define your needs clearly

• Know your pay frequencies
• Classify your employees correctly
• Establish your employees preferred mode of receiving salaries

2. Address your compliance needs

If you are a business operating across the country or across the globe then you will have to adhere to laws and regulations in that particular country or state. So look for a provider who is an expert at providing multi state and multi country payroll services. 

3. Research your payroll provider

Before choosing the perfect payroll provider that is best suited to your needs, do thorough research about the background of the company, their track record, successful implementations etc.

4. Take a look at client reviews

A company’s reliability and reputation is only as good as what their clients, partners and analysts deem them to be. You can take a look at testimonials from their clients, word of mouth of industry friends, analysts etc to get a validation and an outside perspective about your payroll provider. 

For businesses, outsourcing payroll offers various advantages, including enhanced data security, improved accuracy, and easier access to information through integrated systems. By relying on reputable payroll service providers with advanced technology and robust backups, businesses can protect their confidential data and minimize the risk of costly errors and penalties. Ultimately, outsourcing payroll not only reduces administrative burdens but can also lead to significant cost savings, making it a wise choice for businesses of all sizes.