2023: Why you should consider Outsourcing Payroll Processing

Payroll processing is a time-consuming process. Although the time taken to finish payroll processing depends on the size of the organization. The number of employees impacts the time taken to complete payroll processing tasks. Some companies take up to 5-6 days.

But before we get into understanding the importance of Payroll Outsourcing, let’s understand payroll processing in its entirety.

What is Payroll Processing?

Payroll Processing is one of the most crucial functions of an organization as it’s the part where you compensate your employees. To do this your team needs to calculate the total wages based on attendance, make proper justifiable deductions, send payment stubs, and deliver the pay-out.

Now it’s not as easy as it sounds. In the US, the Internal Revenue Service (IRS) and the Department of Labor (DOL) have given certain provisions and established regulations that have to be maintained.

Why is Payroll Processing Time-Consuming?

There are specific tasks in payroll processing that might take more time than others. Such as:

• Calculating Payroll Taxes and Deductions
• Updating Employee Records
• Issuing paychecks.

However, if your company has an automated system in place, that might reduce the time required for payroll processing.

What is Payroll Outsourcing?

Payroll Outsourcing simply means that an offshore firm will handle all your payroll processing. This is possible today because the payroll process has become standardized and can be easily executed and later monitored through payroll processing software.

Calculating wages, importing timesheets, withholding deductions, scheduling pay-outs, and all other payroll tasks are executed through the software. Thus, making it very easy to delegate to an offshore accounting partner.

Payroll Outsourcing is one of the most outsourced accounting services all across. Here are a few stats:

12% of organizations worldwide outsourced their payroll processing completely.

45% of small businesses outsource payroll.

Why Should You Consider Outsourcing Payroll Processing Services?

Business owners and Accountants have expressed multiple reasons for outsourcing payroll processing to offshore accounting firms. Here are a few of them:

Focus on Core Business

By outsourcing payroll processing you save a lot of time. You are able to continue with crucial tasks that bring in revenue while being assured of your payroll process is taken care of. You are able to draw your attention to business development, customer relationship management, and marketing.

Cost Saving

Maintaining an in-house payroll management team can be more expensive than outsourcing to an offshore firm. That’s because outsourcing eliminates the need to hire and train payroll staff.

Improves Efficiency

Through outsourcing, you can leverage accessing an experienced payroll processing provider. Who will be more efficient at processing than an in-house team given the years of experience in payroll processing? Professional payroll outsourcing companies have experienced professionals who are aware of payroll complexities and taxes regulated by the IRS.

Reduces Errors

The offshore team has the sole responsibility of executing the tasks with ultimate accuracy as opposed to multiple tasks and responsibilities that an in-house team has to fulfill. Payroll processing can be complex. Sometimes there are complicated payroll calculations that can lead to errors which result in inaccurate payments or tax penalties. The offshore team has handled complicated payroll calculations and knows how to tackle them.

Must read Common Payroll Compliance Mistakes That Payroll Services Company Should Not Commit

Improved Security

Payroll is a very complicated and sensitive procedure so it needs to be managed properly. But, sometimes with the in-house payroll staff, a few security problems arise like the risk of identity theft, embezzlement of funds, or tampering with company files. There’s also the risk of tampering with the in-house payroll software by viruses, malware, or hackers. This consumes a lot of energy and time for business owners to detect security loopholes in their payroll system.

But, with the use of outsourcing payroll services, business owners don’t have to worry about anything. First, employees of payroll outsourcing companies have no direct link with the company’s staff so they won’t have any personal motive to manipulate the payroll books. Secondly, they use high-tech security tools and have a full-fledged IT team that can easily identify any cyber threats. So, with the use of outsourcing services, you will be easily able to enhance the payroll security system of your company.

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