Payroll is one of the business functions that is most advisably outsourced. It is a complex, detailed, time consuming process that carries with it high risk for costly mistakes. Business owners who manage their payroll in-house spend a great deal of time computing hours, performing gross-to-net calculations for each employee, figuring and paying payroll taxes, and preparing and filing tax returns. Whether large or small, businesses do well to allow other companies to manage payroll, HR, taxes and more, so that they can dedicate more time to the core tasks of the company.
One of the best reasons to outsource your payroll program is cost-effectiveness. Especially for small or medium-sized businesses, doing payroll in house can be a waste of money. Consider the size of your company, the number of employees you have in the payroll department, and how many hours they spend on payroll-related activities, such as calculating payroll, distributing pay, program maintenance, training to stay abreast of changes in tax rates and laws, and more. Compare that to the cost of hiring an efficient business management services provider, and see how quickly you?ll consider outsourcing.
Security and confidentiality are two key words for understanding the benefits of outsourcing payroll tasks. In-house payroll can be risky. Employee records are more easily viewed, making personal information less secure and increasing chances of identity theft, record tampering, or jeopardizing confidentiality. Aside from employee records, software and data are also more susceptible to tampering or hacking when they are on site. In comparison, specialized outsourced payroll solutions provide secure servers and high level encryption technologies, as well as data backup and storage.
A third reason to consider using a payroll program managed by a resource management services provider has to do with government regulations, which are complicated and minutely detailed. Any failure to adhere to federal and state regulations can be problematic. Everything from wage and hour laws to taxes can influence payroll program practices. A professional payroll management company is well versed in not only the rules and regulations, but the ongoing changes that affect them.
International companies, especially, have an added reason for outsourcing payroll issues. Differences in currency values, tax laws, employment requirements, and other factors all impact the payroll program of any company that has international employees or clients. For example, payroll between Canada and the United States has many differences. Over 190 regulatory legislative requirements exist for processing payroll processing in Canada, and numerous details apply for the opposite, as well. American companies who do business in Canada face a variety of compliance issues, and vice versa. Look for a company that specializes in handling the transitions and legalities that apply to international payroll.
Overall, the best payroll service will offer a wide range of services and packages to fit a client?s needs. Along with the most commonly outsourced payroll services, such as standard paycheck and tax calculation, some companies offer additional services like contract generation, labor law compliance, workers? compensation issues, employee benefits management, and bookkeeping services. List and prioritize what services would be most useful to your company and then start researching firms.