Payroll is the compensation a company pays to employees in turn for services offered to the organization. Payroll involves keeping a track of hours worked by employees, calculating wages and salaries, and making payments. It is a focused task, which requires expert and knowledgeable personnel. Payroll was thought to be an uncomplicated accounting job. Nevertheless, it is not seen to be an easy task any longer since it is a complex job that requires great precision.
Moreover, payroll is a work that needs to be done on time. Otherwise, companies can face fines for nonconformity. If you have a business and payroll is giving you sleepless nights, the best option is to opt for payroll outsourcing without delay. Outsourcing payroll will unquestionably save you time and money. It will also ease your burden. On the other hand, when you decide to outsource your payroll task, you need to think through the pros and cons of outsourcing.
We have come up with some pros and cons of payroll outsourcing that will help you to make an informed decision.
- Save Costs and Time
Outsourcing to payroll outsourcing companies will help you save huge amount of time. When your company outsources its payroll operations, your employees will not have to do the time-consuming payroll tasks like calculating salaries, deductions and other payroll related tasks. Instead, your staff members can be used for important revenue generating jobs.
Small organizations particularly could find it difficult to cope up with the costs of payroll. Instead, outsourcing payroll is an efficient solution for many companies. Payroll outsourcing certainly saves time and money. If we take into account costs of employee wages or salaries, employee benefits, national insurance payments, cost of payroll software and other costs, payroll outsourcing turns out to be a sustainable solution.
Apart from the above costs, there are additional costs incurred by the company like processing, training staff, hardware costs, software costs and others. Unquestionably, managing payroll consumes time and incurs costs. Payroll outsourcing definitely helps companies to save considerable amount of time and costs.
- Reduces likelihood of imposition of penalties and fines
It is necessary for companies manage the PAYE (Pay As You Earn) system and need to conform to PAYE rules. Failure do to so, can lead to financial retributions. The penalties can be high. In addition, there can be other repercussions like the time of management being wasted, disappointment for employees and possibility of inspections by the Inland Revenue department.
It can be a challenge, especially for smaller companies to hire, train and sustain skilled, experienced and dependable staff. Untrained employees or improperly trained employees can be a cause of costly mistakes and fines for non-conformity. By opting for payroll outsourcing, you can have risks of penalties, fines and inspections to a minimum since outsourcing providers have specialist and experienced staff who can handle PAYE for payroll.
- Focus on Work
Payroll outsourcing services will enable your company and your organization to focus on various tasks in a better way. It will also enhance your efficiency and increase employee loyalty. You do not have to worry about your staff members being paid in a proper way and on time with outsourcing. By outsourcing to a reliable provider, you do not have to fret over compliance. Hence, your mind can be at ease and you can focus better on your business.
- Access to Knowledge and Experience
Payroll outsourcing providers are specialists in all the things pertaining to payroll – paying staff, government compliance and taxes. Therefore, with outsourcing, you get access to knowledgeable, experienced and skilled payroll experts and that too at a low cost. Every year, many cases reach the employment tribunal and companies need to ensure that payroll management is done properly.
By choosing the services of a dependable and trusted payroll provider, you and your employees can be rest assured that your payroll is being managed competently and appropriately.
- Manage your Business
Payroll management can become extremely complicated and overwhelming with many new regulations. Understanding and taking care of regulations can burden you. You may miss a vital business opportunity due to this. With outsourcing, you do not have to take care of the regulations and you can instead, completely focus on the sales and business related aspects of your business. As an owner of a company, the focal point will be the fundamentals of your business and you will be able to put your energy on the core matters of your business.
- Data Privacy
Payroll involves staff data and many companies are concerned about identity theft and data violation when they think of outsourcing. It can be a concern for companies when they share their confidential staff data to a third party for payroll management. This is one of the reasons companies choose to have payroll processing done in-house. However, outsourcing to a respectable payroll provider should not be a cause of concern. Companies need to ensure that they outsource to a trustworthy payroll provider. Reputable payroll outsourcing companies have stringent data protection systems in place. They have latest and secure technologies like password security, anti-virus software and firewalls so that employee data is completely safe.
Another concern that many companies who are thinking of moving payroll to an outsourcing provider is loss of control. They are concerned about cut-off dates and timings. On the other hand, if payroll is outsourced to a professional payroll outsourcing firm, deadlines and control should not be a problem.
Some companies are apprehensive to outsource payroll thinking that additional costs will be incurred and it will not be valuable to the business. Then again, there are many payroll providers of good standing that offer payroll outsourcing services at a good price. Talking in terms of cost, payroll outsourcing turns out to be a cost effective solution for companies in the long run.
There are pros and cons of payroll outsourcing. If companies weigh the pros and cons, payroll outsourcing definitely proves to be beneficial. Nevertheless, companies need to ensure that they outsource payroll management to a highly regarded provider. This way, their payroll management will be in good hands.