Benefits of Payroll Services for Startups or Small Businesses
Benefits of Payroll Services for Startups or Small Businesses
Payroll management is a difficult task for organisations to manage be it small or big. Even the business leaders can sometimes find it challenging to manage time and attendance, payroll taxes and workers’ compensation. Hence, payroll processing comes into play in this situation. There are a lot of benefits of payroll services which can make an organisation’s payroll and related operations less stressful for businesses of all sizes and industries by delivering Internet-based, user-friendly assistance.
Payroll processing is one of the most vital, but also one of the most challenging, aspects of running a business. Every business tries to operate as effectively as possible. However, mistakes do occur, and they can have catastrophic implications.
Small and medium-sized businesses (SMEs) are more likely to use spreadsheets or engage a professional to handle payroll because they have fewer employees than huge corporations. There are several errors in these payroll processing procedures.
Employee morale and productivity may suffer as a result of errors in the processing and implementation of pay. Legislative compliance is equally as important as achieving accurate and quick computations.
Businesses must understand the complete process of payroll, the benefits of payroll services automation and why it is the need of the hour in order to preserve compliance and employee satisfaction.
Table of contents
What is payroll?
Paying a company’s employees’ salary is known as payroll. It starts with the list of paid employees and ends with recording those expenses.
Payroll outsourcing is when a specialised business administers your payroll to ensure that your employees are paid correctly, safely, and on time every month. They’ll handle all of your payroll administration for you. Your HR, finance, and admin staff will be freed up from these time-consuming tasks as a result of this.
Simply defined, the procedure is calculating what is owed to employees for a given payroll cycle after considering essential deductions such as TDS, employee PF contributions, meal coupons, and so on.
The time interval between two salary payouts is known as a payroll cycle. Salaries may be paid weekly, biweekly, or monthly depending on the needs of the organisation. In India, it is typically processed once a month.
Why is a payroll system necessary?
You’ll need a system in place to manage employee hours, analyse deductions, and send payments to your employees, whether it’s a manual process or a cloud-based service.
For a developing small firm, adopting a manual procedure might be a huge waste of time and resources. If you have a large number of employees, you will have to manually track their hours and prices. Then you must examine tax rules to ensure that you are deducting the proper amount of taxes from each paycheck.
The next step is to handle time-off payouts, track expenses, and pay your personnel. While managing your business and processing payroll, it’s simple to get overburdened.
All of the steps needed to accurately process payroll are automated by payroll technology which is an advantage of outsourcing payroll. It calculates the exact amount to pay your employees each month depending on the number of hours they’ve worked automatically.
Payroll software keeps track of salaried employees and ensures that they are compensated accurately. It can even figure out and account for overtime pay.
Taxes are removed from employees’ salaries automatically, which is one of the major benefits of payroll automation software. You did not have to think about paying payroll taxes or underreporting employee compensation.
Employers who provide payroll services can access web portals that contain vital information about payments, such as tax deductions.
Payroll automation software, above all, helps or allows you to concentrate on running your business rather than on other administrative tasks.
MYTH: In order for taxes to be submitted correctly and employers to be informed, they should be completed in-house. FACT: Every year, new regulations, paperwork, expectations and more difficult concerns are processed along with taxes. Employers should seek out an outside source to minimise mistakes, time wasted teaching personnel on new tax regulations and to ensure compliance with all government demands.
Advantages of Outsourcing Payroll Services
Is payroll outsourcing right for your company?
Businesses of all types, sizes and locations can benefit from the best payroll outsourcing companies in India. However, it is important to consider both the quality of the service and the technology used to perform the job.
Outsourcing payroll is especially beneficial if your company:
Doesn’t have a finance and administration team on staff.
Outside of payroll, the finance and administrative personnel needs to focus on strategic tasks.
Is a global company, and it does not have payroll management professionals in every country.
Payroll management is not consistent, and there is no reliable data recovery system.
Is concerned about existing and future regulatory compliance.
While these are all fair reasons, each payroll processing company is unique. As a result, they must conduct a thorough examination of their situation before selecting the appropriate service. This approach necessitates the evaluation of a number of criteria, including
The size of the workforce and the number of persons performing payroll responsibilities.
Impact on payroll personnel – will they be transferred to other sections of the company or will they have to be laid off?
If there is a shortage of payroll knowledge and skills at the company?
Whether the strategic decision to convert payroll-related costs into a variable cost proportional to the size of the workforce makes sense for the organisation.
Let’s check out some of the advantages of selecting an outsourcing payroll services
One of the most common benefits of outsourcing payroll services is time and money savings. Companies that partially outsourced payroll services surged by 300 percent between 2015 and 2019. One out of every three payroll and benefits administration jobs is outsourced, especially in the banking business, because employees do not need to work from an office.
Payroll processing in-house team is expensive due to the following factors:
Paying the payroll team
Subscribing to payroll software
Managing employee queries, and so on.
At first glance, having an in-house payroll team may appear to be advantageous but it is not at all.
For starters, a payroll staff may lack the necessary transferrable abilities to collaborate with or perform cross-functional duties. Second, when you expand your payroll team, the expense of hiring, setting up, and managing a payroll team skyrockets.
Many business owners and executives make the mistake of underestimating the time and resources required to manage payroll. Finally, you must keep up with tax regulations, personnel, and accounting deadlines.
Payroll outsourcing has long been touted as a cost-cutting tool. Another advantage of outsourcing payroll services is it can save companies up to 18 percent more money than doing it in-house.
It saves money that would otherwise be spent on computer gear, software, and training for organisations. You may grow your firm by reducing costly payroll processing errors.
Payroll processing needs a high level of precision. Benefit deductions, garnishments, new hiring and terminations, and paid time off are all things that need to be monitored and tracked on a regular basis. Furthermore, your financial personnel must keep up with government regulations.
You’ll need to put in a lot of time to figure out how to navigate these subtleties.
Outsourcing your payroll helps you to focus on your HR strategy, recruiting, and other administrative tasks that have a direct impact on employee performance.
You will also be expected to manage mountains of financial data as the number of employees expands. The improved trust and precision with which these obligations can be transferred are one of the advantages of outsourcing payroll.
Simply put, you may focus on enhancing the quality of your recruits, onboarding experience, and other parts of your business rather than swimming through confusing streams of data to figure out paychecks, deductions, or even taxes.
One of hiring the best payroll processing companies is that you can take advantage of specialist knowledge and cutting-edge technologies. By utilising these features, you can even improve your overall payroll process.
Do you have the resources to manage your payroll with the appropriate Finance and Accounting skills? Most of the time, your payroll employees and business owners aren’t well-positioned to keep up with shifting rules.
According to a report conducted by Deloitte, the average payroll company has 12 years of expertise. They also work 25 hours of overtime per month. Even when picking payroll contractors, choose vendors with regional competence carefully.
In the list of benefits of outsourcing payroll, acquiring expert skills is another plus. When you go global, you may find yourself working in various jurisdictions. If your firm has a remote-first and global hiring culture, a specialist with knowledge of local rules and regulations is ideal. Only by outsourcing payroll activities can such specific talents be developed.
Furthermore, managing payroll entails a number of tasks, including
Handling the administration of benefits and deductions
Offering retirement plans
One of the advantages of outsourcing payroll services is that it can ensure that these duties are handled smoothly while you focus on improving your HR initiatives.
Companies don’t always seek ways to cut costs by outsourcing payroll processes. They do so due to technological limits as well. Your payroll resources might be relieved of a lot of burdens thanks to technology. They make it easier for you to concentrate on strategic processes and process optimisation.
The payroll sector has been completely transformed by cloud technology. According to a Deloitte survey, the top three benefits of outsourcing payroll services include payroll accuracy, compliance, and integration of diverse technology.
The traditional finance function has also been altered to one that is shared by HR and Finance thanks to technological advancements. In fact, since 2018, there has been a 64% increase in this tendency.
Employees use a cloud-based payroll system in 39 percent of cases, and process automation is used in 6 percent of cases.
It’s also worth noting that 73 percent of respondents utilise a self-service platform like TopSource, specifically a function that allows them to view payments online.
Payroll processing has evolved as a result of cloud computing. SaaS-based payroll solution vendors, in particular, are getting more inventive about how they may make the platform self-serving to impress consumers.
– It is best for organisations of different sizes, types and locations to opt for payroll outsourcing companies to get both qualities of service and advanced technology.
– Before selecting any payroll processing company it is best to conduct a thorough examination.
– Outsourcing payroll services can help save time and money.
– In-house payroll team can lack the necessary transferrable abilities to perform cross-functional duties. Outsourcing can save companies up to 18 percent more money than in-house.
– Outsourcing your payroll helps focus on your HR strategy, recruiting, and other administrative tasks which can impact employee performance.
– Outsourcing payroll can help when you go global, by handling the administration, worker compensation and many more.
– Payroll resources will be relieved of a lot of burden with the use of advanced technology.
– Security is important in payroll management. Outsourcing payroll services can help avoid identity theft, financial embezzlement and many more.
– Outsourcing allows you to stay compliant while expanding without being sidetracked by local, regional, or national laws and regulations.
Avoid Legal, Tax & Compliance Risks
When it comes to payroll management, security is crucial. It’s a difficult business function which necessitates the secure processing of your employers’ personal information. Even your most trustworthy employees aren’t safe here. Mistakes and failures are inevitable in human conduct; nonetheless, there is always the risk of carelessness, which can lead to identity theft, financial embezzlement and tampering with company records in case of an in-house payroll system.
Using outsourcing payroll software automation could help you avoid these dangers. However, the equipment needed to build up secure servers, networks, and other systems is lacking. This necessitates a lot of your time and effort.
One of the benefits of payroll services process is it allows you to make use of increasingly modern technology to combat dangers.
Global payroll providers, in particular, keep up with numerous data rules and regulations around the world, such as the GDPR, California privacy laws, and so on. Furthermore, the usage of cloud technology improves the security of payroll services.
Because it’s a requirement of the service provided to customers, a credible payroll provider must invest in technology for securing and storing data, along with redundant backup and many server locations.
Compliance – Payroll
Staying informed of laws, regulations, and obligatory norms, especially when hiring across borders, is one of the most significant responsibilities that necessitates extensive research and understanding.
Employers must have a thorough awareness of numerous regulations in order to avoid going afoul of laws such as labour, tax and immigration, among others.
Vacation or holiday incentives, for example, are required in some nations but are optional in others. There may also be regional and local differences in the law.
Opting for the best payroll outsourcing companies in India allows you to stay compliant while expanding without being sidetracked by local, regional, or national laws and regulations.
Why is payroll outsourcing a must-have for startups or small businesses?
Whether you have two or ten employees, payroll takes a long time. This isn’t something you can put off until tomorrow.
At least twice a month, payroll is required. Data entry and double-checking may be required. You must be familiar with the rules and regulations, as well as understand them well.
You aren’t building your startup if you are spending most of your time on payroll processing.
Keep the following considerations in mind when you examine which payroll system is appropriate for your startup:
Simple and easy UI
When it comes to the benefits of payroll services and payroll software, the easier to use, the better. Employees, new hires and your accountant may all need to be able to discover and enter data in your payroll system.
Many basic payroll providers have clunky software and complex user interfaces that can cost you time and money to keep up to date.
Some payroll providers also provide mobile apps, which are a useful ‘easy of use’ feature for entrepreneurs and small business owners who need to manage payroll on the go.
Finding a payroll provider that provides a full suite of human resources and employment-related services, such as retirement plans, attendance, time tracking, vacation or paid time off, commuter benefits and other employee benefits, health insurance administration, and more, can save founders a lot of time and headache.
Finding a full-service payroll platform may need to widen your search to include PEO services, which provide outsourced HR, payroll, benefits, workers’ compensation, and compliance services to small and medium-sized enterprises.
PEOs can be more expensive depending on the size and structure of your company, but the opportunity to consolidate your payroll processing, HR software, and benefits services under one supplier could make running your business easier—especially when your company grows.
Remote workforce friendly
Hiring remote workers are not uncommon for startups, and with COVID-19, it has become the “new normal.” If you want to engage a remote workforce for your business, be sure your payroll provider can give employees self-service options for things like benefit elections, direct deposits vs. paper checks, pay stub access, and downloading crucial tax forms, among other things.
They must also be able to ensure that your company complies with local legislation and tax obligations in each state where your employees live.
Payroll tax support
Payroll taxes are challenging, especially for organisations with remote workforces. Because it must adhere to the payroll tax regulations where remote employees reside in order to avoid penalties and surcharges.
Your payroll provider should provide tax support, such as automatic payroll tax computations, tax filings, and tax deductions, to help you stay in compliance with government regulations.
Accounting software integration
The integration of your payroll system with your existing bookkeeping or accounting software can mean the difference between a streamlined accounting system and a manual data-entry nightmare.
The advantages of outsourcing payroll can simplify data entry tasks. It can eliminate human error, and help maintain up-to-date books when their payroll data and accounting software are in sync via direct software connectors.
The majority of company founders aren’t payroll tax specialists. They don’t know how to properly report employment taxes to government entities.
It’s all too easy to make mistakes that result in audits and even penalties, which isn’t good for your business.
Furthermore, government rules and regulations change frequently, making it difficult to keep up.
Your outsourced payroll partner is a specialist in the sector. So they’re always up to date on the latest rules, regulations, and tax rates.
MYTH: Payroll processing in-house saves money, time and eliminates errors. FACT: Outsourcing is less expensive than hiring, onboarding and paying payroll employees:
You can do your payroll in-house by hiring a person or group of employees. Their salaries are substantially greater than those of online payroll systems or payroll providers. Not only should you think about your wage, but you should also think about how much time and money you are spending on the payroll.
Using the best payroll outsourcing companies in India can help you optimise your payroll procedures and eliminate the need for in-house payroll staff. Payroll service firms in India are also preferred by many business owners because they provide the highest level of legal compliance and accountability.
When business owners deal with payroll experts, they can feel assured that any pay or filing errors will be immediately recognised and addressed. It’s an excellent approach to provide employees with efficient and dependable pay services while reducing liability risks.
Sachin heads the India Payroll business unit and is responsible for global sales into India, India domestic sales and delivery, and local finance support in India.
Sachin has over 17 years of experience with the company, his previous roles include head of UK payroll operations, head of accounting support services, head of sales in India and VP of finance.
Subscribe to our newsletter don’t miss out
Subscribe to receive our latest posts and events straight to your inbox.
Expand faster and stay compliant in over 150 countries without a legal entity
Deploy quickly (in days not weeks)
A single global portal for all your hiring needs
No legal entity required
Experienced expert team
Contact us today & talk to an international payroll or EOR consultant
LABS House, 15-19 Bloomsbury Way London, WC1A 2TH, United Kingdom
3rd Floor, Gamma 1, Gigaspace, Viman Nagar, Pune, Maharashtra 411014, India