{"id":19337,"date":"2023-11-17T10:44:31","date_gmt":"2023-11-17T10:44:31","guid":{"rendered":"https:\/\/synder.com\/blog\/?p=19337"},"modified":"2024-08-27T08:28:29","modified_gmt":"2024-08-27T08:28:29","slug":"outsourced-payroll","status":"publish","type":"post","link":"https:\/\/synder.com\/blog\/outsourced-payroll\/","title":{"rendered":"What You Need to Know About Outsourced Payroll"},"content":{"rendered":"\n

It pays to outsource. Well, it can. Like most options available to business, it depends on what you\u2019re doing and what the business is. <\/p>\n\n\n\n

While outsourcing your payroll operation can certainly deliver many advantages, it makes sense to avail yourself of all the details before making the leap. Because when it comes to payroll, you have to get it right. You\u2019ve got to pay your staff the right amount, and you need to stay compliant with government regulations. <\/p>\n\n\n\n

So, we\u2019ll cover what\u2019s great about outsourced payroll, and why it can be such a good idea to implement. We\u2019ll also go into what caveats there are, so you know what to look out for. Let\u2019s clock on. <\/p>\n\n\n\n

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Contents:<\/b><\/h3><\/p>\n\t

1. What is an outsourced payroll?<\/a><\/p>\n\t

2. Advantages of outsourcing payroll<\/a><\/p>\n\t

3. What to consider before you outsource your payroll<\/a><\/p>\n\t

4. Say hi to hybrid<\/a><\/p>\n\n\n\n

<\/p>\n\n\n\n

What is an outsourced payroll?<\/span><\/h2>\n\n\n\n

<\/p>\n\n\n\n

\"what<\/figure>\n\n\n\n

Time was, a company\u2019s wages were all taken care of in-house in a specific payroll department. Pay packets were made up, and everybody got their money in real dollars and real cents. They were popped in a little envelope ready for collection, for spending in a speakeasy or trading post on the way home. <\/p>\n\n\n\n

Yes, OK, this is a while back, and things have changed a little since then.<\/p>\n\n\n\n

Nowadays, it can make sense to contract out the whole activity to an external body. Obviously, this external body has to be a trusted party – payroll\u2019s not the kind of thing you can take risks with. Unless that is, you have employees with a remarkably offhand attitude to remuneration and\/or a government that\u2019s pretty breezy about tax deductions.<\/p>\n\n\n\n

No, neither is very likely. So, just like any other core component in your business, you should sign it over to a body you have complete confidence in. This is as true for small business accounting<\/a> as for much larger frameworks. <\/p>\n\n\n\n

You also need to be sure that whoever you outsource to gives sufficient priority to confidentiality, as they\u2019ll be privy to a lot of data. This includes macro, in terms of general payroll information concerning your business, and micro, in terms of potentially sensitive information concerning individual employees. <\/p>\n\n\n\n

What gets included?<\/h3>\n\n\n\n

<\/p>\n\n\n\n

\"Outsourced<\/figure>\n\n\n\n

One thing to highlight here is that outsourced payroll is usually just that: payroll. It doesn\u2019t necessarily mean that any other HR activities get outsourced too. Other HR activities like recruitment are usually separate.<\/p>\n\n\n\n

So what generally gets included in payroll outsourcing? Tracking time<\/a> worked and calculating pay due is obvious. What else? Well, setting up payroll accounts for each employee is a good start, and ensuring they\u2019re paid is a key requirement too. Just as important is keeping the business legal by observing the tax framework of any territories that the business is operating in.<\/p>\n\n\n\n

Providing yearly reports for compliance purposes is of vital importance. And providing reports for the business itself to access on an ad hoc basis is pretty crucial too.<\/p>\n\n\n\n

Let\u2019s now turn to why you might be well advised to outsource your payroll.<\/p>\n\n\n\n

Advantages of outsourcing payroll<\/span><\/h2>\n\n\n\n

Cost savings<\/h3>\n\n\n\n

This probably comes as no surprise. Cost savings tend to be the main reason why most businesses decide to outsource in general. 70%<\/a> of businesses surveyed by Deloitte named cost reduction as the most important outsourcing objective. <\/p>\n\n\n\n

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\"Top
Image sourced from 99 Firms<\/a><\/figcaption><\/figure><\/div>\n\n\n\n

Going back to that internal payroll department we alluded to earlier, it doesn\u2019t take much imagination to realize how much internal offices cost to run. Of course, all your payroll staff will want payment, and the office itself will have attendant costs such as lighting, heating, and rent.<\/p>\n\n\n\n

So, it can make a great deal of financial sense to contract the operation out. This is particularly the case where the business operates in a high-pay region, which will necessitate a high wage outlay in order to compete for the best staff.<\/p>\n\n\n\n

Cost savings in outsourcing payroll can be significant, even with a small business payroll service<\/a>. But this is only one of several advantages. Let\u2019s look at the others. <\/p>\n\n\n\n

Time savings<\/h3>\n\n\n\n

Make no mistake, payroll can be time-consuming. Being accurate isn\u2019t necessarily something you can accomplish with speed. And if an activity is time-intensive, then you have to worry not just about the costs attached, but also the possibility that deadlines might be missed. Not paying your staff is a bit of a faux pas, to say the least, so you have to be confident that payroll processing activities are well taken care of.<\/p>\n\n\n\n

Outsourcing your payroll means that you won\u2019t get sucked into any of the time-consuming minutiae of payroll processing. Instead, you\u2019re free to devote yourself to other activities. <\/p>\n\n\n\n

Statutory observance<\/h3>\n\n\n\n

This is obviously crucial to get right and can be more complicated than you might think, especially if a business is operating in more than one territory. A payroll business will be on top of the latest accounting regulations<\/a> so that you can have peace of mind that everything is legally tip-top.<\/p>\n\n\n\n

Accuracy<\/h3>\n\n\n\n

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\"Advantages
Free to use image from Pexels<\/figcaption><\/figure><\/div>\n\n\n\n

Payroll is a major financial outlay for a business. So, it needs to be accurate as the ramifications of a mistake can be huge for the operation\u2019s bottom line. Even worse than that, employees can find themselves without the money they need to pay rent or even eat that month. <\/p>\n\n\n\n

For that reason, it makes sense for payroll to be in the hands of an agent who does it all the time. Ideally, they\u2019ll have built up a degree of experience and therefore, have credentials you can trust. When you outsource your payroll, you\u2019re giving a core process to a professional and trustworthy party. <\/p>\n\n\n\n

Crucially, you\u2019re avoiding the situation that occurs in some small companies where payroll is just something someone does once a month, sandwiched awkwardly between a bunch of other activities. The potential for error within a well-meaning but amateur payroll facility like this is huge. <\/p>\n\n\n\n

Scalability<\/h3>\n\n\n\n

With payroll service software<\/a> delivered via the cloud, you get payroll support that expands to fit your company\u2019s needs. This accommodates sudden and seasonal growth. If you were using the traditional approach, any kind of growth would necessitate a lengthy and expensive payroll staff expansion effort.  <\/p>\n\n\n\n

Outsourcing your payroll means you get the service you need, when you need it, even if it\u2019s only a temporary surge (like a seasonal blip).<\/p>\n\n\n\n

Security<\/h3>\n\n\n\n

<\/p>\n\n\n\n

\"Advantages
Free to use image from Pexels<\/figcaption><\/figure><\/div>\n\n\n\n

It might seem a little counter-intuitive, but placing your payroll in the hands of a remote party can actually enhance security for your operation. To take communications as an example, advances in remote encryption and cybersecurity have made using a cloud PBX system<\/a> more secure than a conventional telephone system. <\/p>\n\n\n\n

It\u2019s the same with an outsourced payroll. As long as you are using a reputable provider, there\u2019s no reason to believe that your data won\u2019t be just as, if not more secure as it would be if it were kept in-house. This is not just due to encryption and other security technologies, but because outsourced staff are trained in and deal with security issues all the time, and realize the importance of such. <\/p>\n\n\n\n

What to consider before you outsource your payroll<\/span><\/h2>\n\n\n\n

There are several factors you should bear in mind before deciding on outsourcing your payroll to a particular party. <\/p>\n\n\n\n