Employee or payroll management system can be described as administering financial records of an organization’s employees’ wages/salaries, deductions, bonuses, and net pay. Salary is the most significant retention tool (for some employees, it is the only reason why they are working). It attracts employees and keeps them motivated to perform in their respective departments. Thus, it is significant that they are given what they are promised in their joining letter.
Payroll Outsourcing Services Helps Businesses Manage Daily Operations Efficiently!
In hopes of managing payroll efficiently, the employees responsible often encounter challenges and/or unknowingly commit errors which further causes more problems for the business. In hopes to remove these challenges or reduce their payroll occurrence, businesses have turned over to payroll outsourcing services that provide them with their expertise, ensuring their work remains unhindered. Time and again, it has been proved that outsourcing payroll is a key business strategy for businesses – big and small if they want to devote their skills and time to focus on their key business operations.
Some Common Challenges Faced by Businesses on Having an In-House Payroll Processing System
While every business is unique and may have different sets of problems in payroll processing, there are some challenges in general faced by all businesses; listed below are some of these challenges:
Processing payroll manually with the help of excel sheets etc., leads to mistakes in calculating accruals, garnishments, taxes, pensions, etc. In addition, wrong calculations lead to tax filing errors that result in penalties suits and are also time-consuming.
A company has different types of employees working – temporary, full-time, part-time, independent or/and seasonal contractors, remote workers, etc. Misclassification of employees under their respective heads usually leads to problems in their benefits entitlement, insurance, pension plan, income tax, etc. It is not uncommon to make errors in classifying every employee under their respective heads when using the traditional payroll processing method.
From enabling reminders for tax filings to checking the expiry date of visa for an overseas employee and from tax remittances to other legal payment obligations, there are several significant deadlines that a payroll department has to keep an eye on to ensure smooth functioning of the organization. Missing out on these important dates and deadlines can lead to penalties, legal action, dissatisfied employees, etc.
Keeping an updated list of employee information and data management is crucial for company information, report generation, and government reporting. However, some issues faced when keeping manual records or using redundant software are cumbersome interface, insufficient record disposition, inability to generate actionable reports from the current software, etc.
Confidentiality and Privacy
Payroll records are confidential, and they must be handled securely. Data should be stored in a secure environment, and access should be given to only people responsible. Often, small and medium businesses fail to provide an advanced and secure environment to store their data, resulting in online security breaches, data theft, fraudulent activities, vandalism, etc.
Keeping Updated with Employment Law and Legislation
Regulatory and legislative changes can be a challenge for businesses. It is also difficult to keep up with the existing employment laws and the changes that are made time-to-time. No matter how tough it may be to keep track of the rules and regulations, it is significant that they are followed to avoid any legal actions.
Modern technology is a boon, especially when it comes to automating tasks. However, having a reliable backup of payroll data is essential for all businesses. Backups help in recovering lost data without the business having to suffer losses. However, these backups are stored in highly sophisticated systems that small and medium businesses are unable to invest in. Outsourcing payroll management system gives businesses access to advanced software and hardware so they can have a sturdy backup for their organization.
Benefits of Outsourcing Payroll Management System
Outsourcing your payroll processing to a third-party service provider allows your business to reap several benefits. Some of these advantages of outsourcing payroll are mentioned as below:
1. Saves Precious Time and Boost Productivity of the Company
Payroll processing is a never-ending cycle and requires the concerned staff to be engaged in it always. Moreover, many other responsibilities revolve around. For example, HR spends significant labour hours in calculating payroll and executing the tasks related to it when they can dedicate this time concentrating on their core business. By freeing the HR personnel from payroll-related tasks, they can handle other strategic tasks that can help in boosting the overall productivity of the company.
2. Reduce Costs
It may not be possible for a small or medium-sized business to have a robust in-house payroll management system. Purchasing and maintaining payroll software and hardware, employing skilled professionals to handle the payroll system, stationery, report generation, dealing with government rules related to labour and employment, etc., is an expensive affair. Moreover, attrition, sudden resignations, long vacations, etc., in the payroll department can interrupt daily operations and cause delays in payroll management or other tasks related to it. Such an investment is not worth making if you have a small or medium business. Considering the business’s cost, it is only wise that they hire a good payroll outsourcing company to manage their payroll.
3. Avoid Legal Penalties
Late payroll tax filings, omissions, errors, incorrect tax filings, etc., call for heavy penalties from the government along with legal suits. Payroll mistakes can cause both angers the employees and cause legal troubles for the business. Small and medium businesses are usually in no position to challenge the tax regulations or labour laws. Outsourcing to payroll providers ensures these rules and regulations are taken care of. From payroll calculations to managing tax filings, they ensure the work is done in agreement with your business while also following the rules and regulations of the government. A good payroll provider maintains a well-trained professional staff that dedicatedly works to keep your business updated with all the necessary rules and regulations that need to be implemented in your work. They ensure that your business stays compliant.
4. Team of Experts
The HR staff is generally responsible for payroll processing and other responsibilities that are related to it. They or the employers don’t have the time to research government forms, taxes, withholding rates, etc. Outsourcing to a good payroll provider allows your business to engage with a qualified team of experts who have the skills to take care of all the payroll aspects of your business.
5. Enhanced Security
Payroll processing is potentially risky because of the immense data that is handled by the entrusted staff. Tampering of company files, identity theft, and embezzlement of funds are risks that the business is always exposed to as long as the company employees are handling the payroll. Even in-house software may not be safe considering the level of safety measures undertaken to safeguard the servers used by the company. Employers may not have the time to always monitor the business to be able to spot unethical activities on time. On the other hand, payroll service providers give you a safe haven for your data. They have the latest technologies, the best systems with multiple security systems, several servers, and the most advanced technologies to store and protect data. They specialize in providing payroll outsourcing services and are always updated with the required technology to be able to serve their clients better.
6. Avoid Technology Costs
Purchasing good software/hardware and various online security measures is not a one-time investment. Technology advances quickly and provides good service only when upgraded and maintained properly. Both software and hardware require upgrades and timely maintenance to provide you with their best features. For instance, using old software will probably not give you access to the latest tax tables that the government accepts. You will have to upgrade the software to be able to access it. Payroll outsourcing services remove the cost of investing in technology advancement.
How Can TopSource Worldwide Help You Manage Employee Payroll Management?
TopSource worldwide offers highly advanced software known as Portico to our customers worldwide. Some of the services offered by us include:
- A fully managed payroll service includes payslips, variation reports, banking uploads, full and final settlements.
- All types of reports for the finance department of your business
- e-TDS and statutory returns filing for PF, ESIC, PT, LWF – PAN India or the benefits and taxes applicable in your country
- EMI deductions and tracking of advances and loans
- Calculation of arrears
- Leave encashment, gratuity, bonus, overtime, ex-gratia calculations.
- Generation of form 16/12BA and investment proof verification – other forms applicable in your country
- Employee self-service dashboard includes payroll reimbursements, dedicated online helpdesk, secured tiered access, IT reports and declarations, payslips, and reports that can access only by finance or HR departments.
We have provided our payroll solutions services to some renowned global companies across Asia, Australia, Europe, and North America. Get in touch with us on the details mentioned to learn more about our services.