Managing the payroll of your employees goes beyond remembering when to pay. On top of that, you must stay current on tax laws and regulations; that’s why more and more business owners opt to do payroll outsourcing to get this off their long list of responsibilities.
What is Payroll Outsourcing?
Payroll is the sum of money paid to an employee for their services in a certain period. Payroll outsourcing is employing a third-party company to manage everything related to payroll.
Without outsourcing this service, companies will have to set up their own local entity, train a significant number of people to do the job, buy a payroll software, and keep track of complicated tax regulations. All this can be costly and time-consuming. Thus, payroll outsourcing gives the best value for your money.
Furthermore, payroll outsourcing is different than hiring an employer of record in that the former only focuses on functions concerning payroll. So, you may have to tap on other experts to handle other aspects of employing workers.
When to Outsource Payroll
Primarily, the time and cost of setting up a team to operate payroll tasks weigh heavily on deciding to outsource. While this can be done manually or online by the same company, sometimes the cost and time allocated can’t be justified. Other indicators that payroll outsourcing is needed are when:
- There are too many employees on assignments or projects.
- The company doesn’t have a local entity.
- The host country’s laws on employment and withholding are complex.
Although these factors seem manageable at first glance, you’ll realize they require so much more down the line.
However, you still have the authority over a third-party company you outsource in that you can customize the tasks they provide to your company. Payroll functions provided by an outsourced service company may vary from one to the other, but the following are typically the ones outsourced:
- Withholding social security and pension contributions
- Supervising employee benefits
- Handling required paperwork and maintaining employee records
- Calculating employee salary and wages (with bonuses or deductions taken into account)
- Distributing payroll either by depositing or issuance of checks to employees
- Remitting state and federal payroll taxes
What are Top Reasons Why Businesses Outsource Payroll Services?
Apart from the time and cost spared, there are far more benefits a company enjoys by giving this function to a third-party organization.
Payroll Outsourcing Expertise
A professional payroll company focuses on anything payroll-related. Thus, you can rest assured they know the job inside and out. You won’t have to worry about the complexities of ever-changing state or federal laws since you have it covered by a team of professionals.
Enhanced Security of Payroll Data
Outsourcing payroll services to a reputable and experienced provider eliminates the possibility of identity theft, embezzlement, or tampering with company records for personal gain. They usually invest in highly secure software to make sure employee payroll data is safe.
Integrated Benefits
For a company offering multiple benefits to employees, you’ll have different healthcare plans. These plans are normally different from one another due to an employee’s status, such as single vs. married, dependents vs. none, part-time vs. full time, and difference in salary levels. Leaving this to an experienced team ensures you won’t have to face compliance issues.
Choosing the Best Payroll Outsourcing Company
If one or two functions mentioned above seem complicated to you, it may be time to outsource this service. Additionally, with the amount of work and trust needed from this third-party company, you only want the one who’s been in the business for many years.
ClearPath has been handling payroll services for 25 years now. We have maintained a favorable reputation in ensuring all the requirements are met with precision. Book an appointment, and let’s outline the key features needed for your business.