The competitive industry scenario has compelled businesses to work on approaches that streamline their business processes in a cost-effective manner. This is exactly when outsourcing of non-core business activities enters the picture. Outsourcing HR activities in particular, enables businesses to focus on their core elements and increase their productivity. Payroll management is most frequently handed over to external service providers who have the expertise and manpower to deliver accurate and legitimate payroll services.
Payroll is a critical task for businesses; a great deal of information lies with the payroll manager including employee information, timesheets, punch cards, leave policies, federal & state payroll tax rules, etc. He is primarily responsible for ensuring that the employees, taxation partners & business all across your geographically dispersed locations are tied in a single thread. While several companies continue to carry out in-house payroll processing owing to reasons such as achieving greater control over internal processes, confidentiality, etc., the majority of businesses opt for external payroll management provider for saving time & effort.
In a recent online survey conducted by ‘thehrbulb’ among HR managers of top 20 IT firms in Bangalore, payroll services offer several advantages of which include:
- Reduces infrastructure cost – To manually compile the data one would require a vast amount of infrastructure as well as staff. But by availing payroll services, you can reduce the need for infrastructure and additional staff.
- Reduces operating costs – You need not hire additional staff and also since you will be using limited infrastructure, you can save the money spent on the maintenance and operations.
- Enhances tax efficiency – Different income slabs demand different taxation schemes. The income tax deductions from the payroll must be done meticulously and accurately. Procedures related to this including calculating tax obligations, tax returns filing, etc. can be complex which can be avoided by opting for payroll services.
- Reduces penalty risks – Businesses pay penalties due to incorrect or late fillings. But payroll services reduce such risk of penalties via tax guarantees.
- Saves time – Reduces time spent on processing and manually compiling information related to wages, bonuses, deductions, etc.
The benefits of payroll management services are not limited to the aforementioned ones. A reputed service provider will also integrate a wide range of add-on perks such as guidance on employment law, recruitment, workplace safety & health support, attendance & HR, etc.
In short, there is a long list of reasons why you just cannot afford to hire a payroll manager.
However, before finalising your payroll vendor, you must consider several aspects to ensure effective and cost-saving service delivery. The compiled checklist includes:
- Employee time tracking – Ensure that your payroll vendor tracks the working hours of your employees.
- Pricing structure – Check out if the service provider offers a clear and transparent pricing structure based on the services you require.
- Implementation process – Make sure your chosen payroll service provider utilises a well-tested process & platform that is easy to handle.
- Effective management of compliance and tax payment – They should be able to handle all state & federal tax and also manage the end of the year W2 & 1099 form distribution.
- Query management – Inspect if the company utilises ESS portal to enable your employees to raise a query regarding salary, bonus, etc.
- HRIS – Note if your chosen outsourcing company integrates HRIS to centralised repository of employee’s data.
- Filing of form 24Q – Figure out if the chosen organisation helps you in filing quarterly returns (form 24Q).
- Data security – Know where and how they store your data and check if the payroll service vendor has experienced any security breaches.
- Cutting-edge technology – Ensure that the service providers are using the latest technology to handle your process.
- Integration – Check if the platform used to process the payroll is built using an open API.
- Size of the company – Check your service provider can handle your huge corporation or does it demand additional elements from your small business.
- Services provided – List the services you are looking for and check if your service provider delivers you the required ones.
- Customisation – Every company has a different payroll system. Make sure the one you have chosen provides the service that suits your needs.
- Process reimbursement & arrears – Ensure the organisation maintains consolidated arrear reports to help you during audits.
Rest assured, a reliable payroll manager will ensure two things for your organization; one, increased focus on company growth, and second, higher levels of employee satisfaction.