Small businesses will have a smaller team and hence lower bandwidth. Following the strategy of managing with required employees, having someone with a niche skill of payroll may not be possible and assigning it to someone who isn’t an expert can lead to major errors in pay management. Above this managing payroll in-house is even more complex because of tedious taxation processes and compliance management. Any mismatch leading to taxation errors or compliance will lead to sorting it with the Government, which any small business wouldn’t want to get into. And if there is an error in the pay, you will be upsetting an employee and losing trust.
It is a good practice to have experts work on tasks that you are not too sure about. You can choose to outsource the work to a payroll outsourcing services provider or simply choose an accountant who can take care of this more effectively as compared to your training or hiring an employee internally for this task.
Payroll outsourcing could be expensive but small business should look at the bigger picture. You don’t have to train or monitor someone in-house, you are letting experts manage compliance obligations and ensure tax adherence. They can help you in setting up best practices based on their experience with handling payroll for companies like you. So overall other than getting your payroll managed, you let go of related nuances and at the same time learn from experts. Real-time reports and anytime access to data comes as part of the package so unavailability of data or no control is out of the question.
Having said the above, outsourcing may not be a fit for all organizations depending upon their style of business. It is still a good idea to evaluate it. Speak to a few payroll management service providers. Know about the benefits in black and white and re-evaluate.
To be sure you get rid of the pain of managing payroll it is important you choose the right outsourcing partner. Here are a few checks and considerations when you plan to outsource.
First thing first, know your exact requirement
Defining the exact services you need is essential. You need more than just payroll management for sure. Importing pay figures, incorporating bonus amounts or requiring the pay data to be accessed by senior management at any time are important services that you need. Ask these specifically and look for a payroll service provider who can adhere to your requirements. Also based on your company size, industry or payroll schedule your needs will be unique so don’t go by a generalized service package. Know about all types of services the payroll outsourcing company provides and asks for customization if the standard doesn’t fit you.
Which right is your right
There are a plethora of payroll outsourcing and accounting outsourcing companies and each claiming to become your ‘right’ outsourcing service provider. It is your job to choose the best out of all. The only checklist you should have is ‘does it fit your requirement?’. It may have the best of clients but are you comfortable with their services, their policies, costing and do their experts give you the comfort that they will be able to handle your payroll. This is the time when you need to scan them from all angles as you are choosing to outsource a critical portion of your business.
Update your data
The payroll service provider will take care of everything related to payroll but check if they will help in creating a proper data repository with past data for you that can capture end-to-end employee record and pay and bonuses and more. It will be a good idea to clear off the past data as well. You should also ask your current payroll manager to collect and have the data ready of the past 1 year so that the same without any hiccups can be shared with the payroll service provider during the transition.
Is the outsourcing company technology-oriented?
The need and demand of the services world is changing. Now you have a few offices, tomorrow you may have many in different countries with your staff working from multiple locations and even working on the go. How would you ensure that the data from all these different locations is collected, is on time, is precise and calculates payroll based on rules as per the specific location? Even if there are people working specifically on this it is daunting to have an error-free data in place. This is very technology comes in handy. Put this requirement in front of the payroll outsourcing partner you are evaluating. See how well they decide to use technology to cater to this scenario. If they don’t plan to do use technology to cover this scenario then they aren’t your right pick.
With technology, there comes many benefits as well as a few challenges. Data leak is easier now with data available on the internet. Also as you may be managing the payroll for multiple offices, confidentiality needs to be stronger. One of the main concerns a small business is sharing the data with a 3rd party with the concern that it may get shared by someone unwanted. When evaluating a payroll outsourcing provider it is important you thoroughly understand their processes and plans to manage your data. Look at their security certifications and regulations that they follow and then decide.
It is important for a small business to know the pros and cons when outsourcing payroll. The benefits are more undoubtedly if the checks are kept on. Communications, data access, compliance adherence, confidentiality, transparency and expertise play an important role. If these are taken care of well then the small businesses will have an easy way to get the pain of payroll management off their head and focus on core items.