Payroll Outsourcing - How to Avoid Nightmare Mistakes

Payroll Outsourcing: All You Need To Know

Payroll Outsourcing: All You Need To Know

July 7, 2021

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Key Takeaways

  1. Payroll outsourcing is a service which is offered by an external company or service provider that specializes in payroll administration. These organizations often provide accounting, legal and tax support, ensuring that their clients remain in compliance with local laws and practices.
  2. Companies should assess their specific needs and future plans in order to determine if their payroll process should be outsourced.
  3. Businesses who do not have the HR and accounting staff to process their payroll internally need to outsource payroll operations in order to ensure they remain compliant with local regulations.
Summary

In the past, companies of all sizes would do everything by themselves from operations to payroll to finance, they would keep everything in-house. As time progressed the benefit of outsourcing certain features became more apparent, with businesses starting to outsource an array of functions. Businesses began to outsource different functions that made operations easier and an example of this is payroll outsourcing.

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What is Payroll Outsourcing?

Payroll administration involves the calculation of employee’s salaries or wages, taking into account the number of days worked, any deductions, expenses, re-imbursements, taxes and any other calculations that may need to be made. The administration of the employee payroll can be a complex task, as it needs to be done in compliance with local laws and regulations.

Payroll outsourcing is a service which is offered by an external company or service provider that specializes in payroll administration. These organizations often provide accounting, legal and tax support, ensuring that their clients remain in compliance with local laws and practices.

Who Should Outsource Payroll Activities?

Businesses across of all sizes and across all industries are able to outsource their payroll activities. Generally, small to medium sized business outsource payroll as it may be costly or slowdown productivity if it is processed in-house. Larger businesses who opt to outsource their payroll activities generally do so when sending an employee or group of employees to a different region on assignment for a particular period of time.

Payroll outsourcing is most useful for businesses who:

  • Do not have an in-house finance team who usually process the payroll.
  • Do not have an effective payroll management system setup.
  • Are considering expanding and do not wish to employ more administrative or finance staff.
  • Wish to operate in a different country or region and do not have an entity setup in that region.
  • Want to solely focus on their core business activities.
  • Wish to reduce risk of non-compliance with local regulations and processes.

Companies should consider the above-mentioned points as well as the specific circumstances surrounding their business, to determine if they should start looking for an outsourced payroll service provider.

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