What Is Payroll Outsourcing? What is the Use?

Businesses sometimes hire an external firm to manage all payroll functions which helps save time and money and helps reduce the requirement for in-house trained payroll staff,  buying and maintaining the appropriate software package and catering to updated PAYE legislation. Whether payroll outsourcing is a cost-effective solution is dependant on a lot of complexity of the organization’s payroll requirements. 

The payroll outsourcing in the service role differs some suppliers provide a barebones service while others will manage with other things such as liaising with HMRC and maintain complete compliance without the main organization ever having to manage with payroll. 

 Business consultants have long condoned outsourcing non-core functions.

A non-core function is not a profit center. A non-core function is integral but it does not differentiate between your business strategically from competitors.In most businesses, administrative and back-office activities such as payroll are known as non-core functions. So, they are key candidates for outsourcing.

 Business owners and managers require several answers to the questions,  what do you tend to gain from outsourcing payroll? Is it worth investing all the time and effort to investigate and find out all the appropriate outsourced service providers?  Then there’s the work which helps in the changing of the function outside to the third party service.  Are the benefits of outsourcing more than the effort?

Ideally, outsourcing has three key goals to fulfill.

It frees up time and resources and helps concentrate more on your core business.

It reduces costs and risks.

It gives you leeway to more technology and expertise for greater performance well, such as payroll.

Tips for Choosing an Outsourced Payroll Provider

If you are considering outsourcing payroll, it’s a given that you should look at three points you’d look at when choosing any kind of provider: 

price

service

reputation

But when it comes to payroll, you can consider other points,

Depending on the requirements for a company may cater to the payroll services that they outsource while retaining control of other aspects. The payroll functions usually outsourced to a third-party provider include:

• Running payroll and making any employee pay and withholding calculations
• Depositing funds directly or in issuing checks to employees
• Calculating state & federal payroll taxes, & making tax withholding payments
• Filing required government reports
• Withholding social security and pension contributions
• Administering employee benefits

What Payroll Functions Can Be Outsourced?

Depending on their needs, a company may cater to the payroll services that they outsource, while they retain control of other aspects. The payroll functions are typically outsourced to a third-party provider such as,

Running payroll and making the employee pay and withholding calculations

Calculating state and federal payroll taxes, and making tax withholding payments

Depositing funds directly or issuing checks to employees

Filing required government reports

Administering employee benefits

Withholding social security and pension contributions