Today’s payroll processes can be time-consuming and stressful, which is why 73% of organizations have turned to payroll outsourcing. Paychex solutions help with HR challenges faced by businesses with employees, such as payroll, employee support, compliance issues, etc. For smaller businesses, outsourcing payroll through a payroll solutions software solution will almost always be cheaper than DIY solutions. Outsourcing payroll can help businesses save time and money, but it’s important to understand the benefits and drawbacks before making a decision.
Automation simplifies that, so you’ll want to find a payroll service with good technology. Best practices suggest opening a separate business bank account specifically for payroll. cash book: definition components and uses Many companies set up sub-accounts of their primary bank account to simplify the transfer of funds to cover payroll checks and direct deposits. Benefits administration for a global payroll is different also.
Payroll providers can also handle payroll taxes and ensure you comply with local tax regulations, regardless of where employees are from. You may need to supply specific tax forms and other necessary information about workers, like their Social Security numbers or Tax Identification Numbers (TIN). If a provider handles payroll data for employees in the European Union (EU), they have to meet General Data Protection Regulation (GDPR) standards. Your provider should also have a data processing agreement (DPA), which outlines how the parties will process and store your data in compliance with the GDPR. This includes appropriate security policies, encryption, physical data protection measures, and risk assessments.
HR teams with companies doing in-house payroll will be responsible for checking health insurance requirements and maximum retirement contribution rules in the countries where you have employees. The business needs to do that every pay period if you’re actively recruiting. Once information has been exchanged and procedures established, the payroll outsourcing provider begins its actual duties. This almost always involves distributing pay on a clearly defined schedule (every two weeks is popular). As with performing payroll functions in-house, applicable taxes must be withheld by the provider before payments are made. The payroll service will likely need access to that information to calculate and deliver payments via payroll checks or direct deposit.
Let’s break down the costs and benefits of each, so you can determine what’s best for your company. “Our CSM — in fact, the whole Remote team — are clear when they offer guidance. I’m not a native English speaker, and the style of communication is so pleasant. I don’t feel alone in the process.” Since you’re trusting another company with personal and financial data, you need to be sure that it is compliant and able to protect against data theft.
Payroll outsourcing also enables globally dispersed organizations to save money if they use one global payroll provider. Hiring and paying employees in multiple countries requires more payroll administrators and legal advisors. Typically, outsourcing payroll services costs less than creating an in-house payroll department. 8 questions answered about electronic check payments Keeping up with compliance laws in one region requires a lot of time and expertise. If your company expands internationally, that workload grows.
Clarify from the start what exactly is covered under the provider’s base fee, and what (if anything) is going to cost extra. Cover your bases, ask about hypothetical scenarios, and don’t just focus on standard payroll operations costs. For instance, some providers incorporate hidden termination fees when an employee leaves, or charge sizable sums to transfer to a new provider. Ask potential providers how they guard all the sensitive data they handle and don’t settle for platitudes. This can be a tricky thing to assess, especially if you’re looking for payroll partners in new markets.
Processing payroll and maintaining compliance standards is difficult for overwhelmed payroll departments, especially if their organization is growing quickly. This overwhelm can often lead to payroll delays and mistakes. The voluntary security and compliance standard SOC 2 is also recommended because it has clear guidelines on how to deal with sensitive data. For accurate payroll, you’ll need to collect personal information including birthdates, Social Security numbers, addresses, wages, and more. Outsourcing gives your business the chance to grow and scale until you’re ready to commit to the expense of in-house employees. Remote can do all the heavy lifting for you, giving you peace of mind and allowing you to focus your time, money, and resources elsewhere.
They take care of everything from calculations to tax filings, offering expertise and compliance guarantees. If you’re hiring (or planning to hire) team members in different countries, payroll can get a lot more complex. For example, you’ll need to consider local labor laws and calculate salaries in a range of currencies. When it comes to payroll outsourcing, the decision is entirely up to you. Because of this, you’ll want to do your research and weigh the pros and notes payable definition cons before deciding whether or not outsourcing payroll is a good idea for your business. As with any business decision, it’s up to you to decide whether or not the pros outweigh the cons when looking to improve your current payroll processes.
