Outsourcing Payroll Services: Pros and Cons

payroll services Australia

The time will come when you have a difficult decision to make: whether to continue managing your payroll services by yourself or to outsource it. If you believe that you are spending too much time and money managing the paying of your employees and not enough actually managing them, then it is time you did something about it – and cost might not be your only problem!

Whether you own a small business or a multinational corporation, your payroll services costs should be managed and budgeted just the same as any other cost to your business. This is particularly true of a small business where these costs represent a significantly higher proportion of income than for larger businesses.

It can all get a bit much and if yours is a small business that employs a bookkeeper or accountant just to look after your taxes then you are likely trying to do it all yourself. It might be time to stop and consider outsourcing payroll service. You could employ a permanent wages clerk, but that’s a bit over the top if you are only employing a few people. On average, the cost of outsourcing payroll services is about 50% of looking after it yourself.

Even though you may employ very few people, the software system you use to manage your payroll does not cost you significantly less than that for a company of hundreds or even thousands of employees. Your wages bill will be less, certainly, but the payroll software and services will likely be similar priced – and, therefore, a higher proportion of a small business’ gross profit.

Here are some things you should consider when seeking a firm to handle your payroll services:

·        Reliability: 

Is the firm you intend to employ reputable? Do they have a good track record in handling payrolls for other businesses? Before outsourcing your payroll to any company make sure you have some decent references. Ask them for some company names they are dealing with and get on the telephone and ask if they are satisfied.

·        Cost: 

This is important, because in every business you must assess cost against benefit and decide whether the money you would be paying warrants the benefits gained. If the cost is not going to be a lot less than employing a part-time clerk or bookkeeper then the latter option might be preferred. Whether that is the case or not is a question only you can answer.

·        Reports: 

Most will make check payments where relevant, direct deposits, provide pay-stubs or pay-slips, W2 forms, and management reports. Ask to make sure.

·        Services: 

Do they take care of everything? Most of them will be offering for full service such as wages, tax, salaries, insurances, pension, health, and the retirement payments as well as any other deductions made from the employees’ wages. Just make sure that they will be looking after for a calculations for an overtime payment, commissions, pay bonuses to order, and any other form of payments which considered not standard, but can vary weekly or monthly.

Convenience and compliance are some of the benefits to be gained by outsourcing your payroll services processing in addition to cost savings.