The Role of Payroll Outsourcing in Implementing an Enterprise System
Payroll Outsourcing
Payroll outsourcing is nothing but the employment of a third party service provider to manage the financial administrative and compliance responsibilities of hiring personnel. In most instances, both the time and monetary cost of establishing and administering an in-house payroll department can never be justified, hence the payroll services are usually outsourced to a third world company. This provides the organization with several advantages. Firstly, it reduces the payroll processing costs as the payroll outsourcing company will take care of most of the payroll processing related tasks, thereby reducing the overall staffing costs. Payroll services can be processed through a remote data entry system which does not require manual intervention or too much training. Processing of payroll via a remote data entry system ensures accuracy and timeliness of the data entry process.
The advantages of third-party payroll outsourcing vary depending on the requirements of the organization. Some organizations find it very convenient to outsource their payroll outsourcing requirements to third-party payroll providers because they don’t have the requisite staff to maintain and administer the payroll department. Hence the organization is able to save on the required manpower and resources by engaging the services of the third-party payroll outsourcing provider. On the other hand, some organizations might need the human resource expertise that is possessed by the in-house payroll management team to integrate the electronic data into the employee’s record.
Payroll outsourcing service providers can also be beneficial for organizations who wish to implement a unified and single payroll administration system for the entire organization. Such payroll outsourcing service providers will be in a position to tailor-make the outsourcing solution very specifically fit the organization’s requirements, thereby reducing the risk of errors and misinterpretations. Furthermore, utilizing a service provider for payroll outsourcing enables the employer to receive feedback from the service provider immediately. A feedback system enables the employer to verify and rectify any inaccurate information provided by the service provider quickly, which greatly enhances the efficiency of the payroll administration process.
The Role of Payroll Outsourcing in Implementing an Enterprise System
Many companies offer their employees a payroll deduction, commonly known as an EIC, which allows an employee to receive part of their regular salary in excess of the statutory income tax rate. For many employees, receiving an EIC is extremely advantageous. The main advantage is that the employee receives the full amount of their regular salary without having to wait until they receive their next paycheck. Moreover, employers who provide EICs typically charge a flat fee for the entire year, irrespective of the number of employees employed or the size of the company.
Another common payroll expense is the salary pay and benefits package. Most employees receive their salaries on a fixed period and are paid at a fixed rate. For small companies and those with limited payroll staff, the cost of acquiring and paying payroll taxes can be very burdensome. By leveraging the services of a payroll service provider, an employer can significantly reduce the cost involved in administering the salary pay and benefits process.
Employers also incur payroll deductions each month. These deductions are itemized and are based on the employee’s gross salary and are then deducted from the employee’s next paycheque. Maximizing these deductions helps employers save money, while reducing the paperwork associated with filing the payroll each month. By outsourcing these functions, employers are better able to ensure that the employee’s wages and input tax are calculated accurately and all applicable deductions are taken into account.