The Truth about Outsourcing Your Company’s Payroll in China

outsourcing hr in chinaGiven the fact that there are a lot of fast changes happening very quickly in the business world because of globalization, companies are always looking to find new strategies that will help them get the competitive advantage they need.

Outsourcing human resource services are one of the outsourcing methods that can help a business organization cut down the operational costs of the whole business organization, while at the same time giving that business the ability to focus on its core incentives that allow it to compete in the business market. Many small business owners are finding that they can simplify the process by using an outsourced payroll provider to manage the entire process cost-effectively and efficiently.

Human resource outsourcing is gaining popularity every year, and there are a lot of business organizations that do this globally. In this article, we will focus on outsourcing HR services in China as this country represents plenty of opportunities.

Why Is it Advantageous to Outsource Your Payroll in China?

1. Save Time

Using an outsourced payroll solution is typically more efficient for a small business than processing payroll internally. Leaving payroll to experts frees up hours that you can devote to other important parts of your business. Whether it is your time, staff time, or a combination, chances are the hours could be better spent winning more business, improving customer service, fine-tuning business operations or launching a new product line. Among the areas where outsourcing will save time are:

  • Processing payroll
  • Cutting and distributing paychecks
  • Calculating and paying withholding and employment taxes

2. Save Money

Many business owners underestimate the cost of processing payroll internally by failing to account for all hours spent angood collaborationd resources allocated to pay employees and maintain payroll paperwork. A thorough cost assessment usually proves that a small business saves money by outsourcing the processing, tracking, and filing of payroll documents. To assess your own internal payroll costs, consider:

  • Consider the cost of your time and the time of anyone who processes or “touches” payroll. Often, many people in a small company are involved in the various parts of payroll processing.
  • What savings would outsourcing provide: since an outside provider can handle all the responsibilities involved in managing payroll and answering employee questions, a small business can often eliminate or re-allocate an internal payroll resource.

3. Avoid Penalties

Calculating federal, state, and local employment taxes and filing payroll-related tax paperwork can be more than just a hassle. If it’s done incorrectly, your business may face penalties and even interest on money owed since the mistake was made. In fact, it is estimated that one in three small businesses receive a tax penalty costing over $800 each year. Outsourcing payroll does away with the risk of many of these costs and hassles because:

  • An outsourced payroll provider calculates payroll taxes, based on its expertise and close tracking of regulation changes
  • Monthly or quarterly employment tax reports are managed by the payroll service, ensuring they are submitted correctly and on time
  • Payroll providers may assume penalties that come as a result of incorrect tax calculations

4. The Case of China

Doing business in China is all but an easy task and one major issue will be payroll in China. If you’re incorporated locally, you need to ensure that your local entity is legally capable of running a payroll. Even if you are considering local incorporation in the future, a local payroll provider reduces your liability in the interim. Further, a management company accomplishes all of the same payroll responsibilities, alongside numerous other specialist services that reduce your liability even more.

5. Local Payroll in China

Your employee will need to get paid in China, but establishing a local payroll can be extremely difficult. Even if you already have a local company, you need to confirm that it’s appropriately registered to run a payroll and to file and deduct taxes. This requires sufficient administrative staff that is up-to-date on all tax requirements in China.

6. Setting up a Payroll in China

To set up a local payroll, your company will need to incorporate in China. This will be another issue necessitating extensive research; how long will incorporation take for your company, and how much will it cost? Depending on your budget and time frame, a temporary project may not justify local incorporation. In that case, it’s more efficient to outsource the administration to a local payroll provider.

Even if you plan on incorporating locally, using a payroll provider can present an extra security measure while you complete the process. This enables you to second employees onto a work site immediately, without exposing your company to unnecessary risk.

INS Consulting Can Help You Find the Best Solution for Your Business in China

If you want to find a payroll outsourcing company, INS Consulting is a local firm based in Shanghai which has already helped over 200 foreign companies with its payroll solution. Recognized as the HR Outsourcing leader, we provide top notch services in order for you to put your mind at ease while you are setting up your business in China.

Contact us at info@ins-globalconsulting.com

Fill in the Form to Know More About Payroll in China

I Need Employment Services to Hire Staff in China

How can we help your business in China?
  • Please include the country code that corresponds with the country you reside in.
  • The starting date of my project in China is on:
    Ex. allowances, transportation expenses, 13th month salary, etc...
  • This field is for validation purposes and should be left unchanged.

See also:

-Why Choosing PEO Services over Entrepreneurship in China?