Why Payroll Outsourcing Is Beneficial to an Organization

The sum total of salary records of the employees, wages, and deductions is referred to as the payroll of a company. Payroll refers to the amount of money paid to an employee for providing certain tasks for the organization on a specific time period. Payroll plays an important role for an organization.

The firm may hire professionals (outsource) for the payroll function to save time, money, and reducing the need to train the in-house employee for this job. Whether the payroll function is cost effective or not depends on the various issues of a company’s payroll requirements.  This is where the organization needs the help of HR to make the process of Payroll cost effective and smooth.

Benefits of Payroll outsourcing are as follows:

·         To get professional payroll help: this helps the expert to answer to various Payroll complexities leading an organization to stay compliant.

·         Easier then payroll software: to an online payroll company, the process helps to secure data storage in the Cloud and reducing the burden of downloads, uploads, installs or upgrades.

·         Time savings:helps the companies to focus on their business and let the outsourced payroll function focus purely on payroll.

In most cases, Payroll is the first service being decided by a company to outsource, mainly because this is the area where no amount of the company’s money is subject to loss. Payroll outsourcing is a more cost effective method than hiring an additional employee for the organization. This also helps the companies to reduce the risk and legal errors incurred, making the company to have a legal protection to their business, as well.

Payroll outsourcing requires the best technologies to be used. This helps the company to obtain a best solution to their problem by using the latest technologies.

Monthly and quarterly employment taxes are being managed by Payroll Outsourcing, This helps companies to pay their taxes on time without any mistakes. The Payroll providers may assume penalties that are a result of incorrect tax calculation on their end. Example; W-2s and 1099’s are handled directly by the payroll provider.

There are three main types of payroll services:

Ø  Those provided by bookkeepers and certified public accountants

Ø  Professional payroll services

Ø  Employee lease companies

For small scale organizations, payroll services reduce the problems associated with processing payroll and maintaining all the associated information required for tax preparation and filing. For large scale companies, payroll outsourcing helps in reducing the head count needed to manage this function internally. 

While talking about payroll outsourcing one must understand what is a Payroll Vendor. The Process involved in selecting a Payroll service provider is as follows:

1. Ask for three to five references from each payroll service or system provider.

2. Inquire about their financial solvency. How long have they been in business? (Are they going to be there tomorrow? Next week? Next month? )

3. Ask if they have undergone an SAS 70 or SSAE 16 audit and, if so, can it provide the report?

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Created on Dec 31st 1969 18:00. Viewed 0 times.

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