Getting payroll right is a skilled task. As we’ve seen in the news lately, even a dedicated in-house payroll department can make mistakes sometimes, which can negatively impact the company’s financial health and reputation. Outsourcing this complex and time-consuming function has many benefits.
5 reasons payroll outsourcing is a great decision
An outsourced payroll service de-risks your payroll function and saves you money. You can opt for a payroll service offered by an accountant or bookkeeper, or go with a company that only offers payroll (sometimes called a payroll bureau). Both are good choices, but we think a payroll service from an accountant has an edge if you could also benefit from the tax advisory and other expertise they hold.
Outsourced payroll services should be tailored to your needs and could include anything from determining employee wages and withholding taxes to updating holiday and sick pay and deducting employee-contributed payments for benefits.
The benefits of a payroll outsourcing or payroll bureau service
The advantages of outsourcing are many and varied. Here are our top five favourite reasons to outsource:
Payroll outsourcing is convenient
With outside payroll bureau services, you simply send over the hours, deductions, and salary amounts of your employees, and the firm takes care of everything else, including sending the payslip and transferring the payment.
A good payroll service will also handle employee pension deductions and make payments to pension providers, providing management reports and calculating employee tax obligations.
Payroll outsourcing minimises your risks of fines, penalties, and WRC inspections
A payroll bureau or service ensures you are always up-to-date with new tax laws related to employee payroll. It can be difficult for smaller businesses to engage, train, and retain suitably reliable, qualified, and skilled staff. Inadequately trained staff can lead to expensive mistakes and possible penalties for non-compliance. Remember, the Work Relations Commission carry out inspections and audits to ensure employees are in receipt of all entitlements under employment law (breaks, leave, etc.).
The financial penalties for failures to meet PAYE compliance regulations, especially under the latest regulations, can not only be severe but will require you to dedicate senior management and external accountant time to answering Revenue queries – with the possibility of a full-scale Revenue audit if you are found to have made significant mistakes.
Payroll outsourcing gives you peace of mind
Given the above, you won’t be surprised to hear that outsourcing your payroll to a trusted payroll provider will give you and your team peace of mind. You won’t only save money, you’ll also know that your tax compliance is in good hands.
You’ll have the reassurance and confidence that your payroll responsibilities and obligations are being properly and efficiently discharged, giving you the space to better focus on company growth and improved productivity.
Payroll outsourcing saves on costs
There are two main ways payroll outsourcing saves you money:
Save on technology costs with outsourced payroll
Payroll software has an initial acquisition and installation cost. The learning curve means you also face ‘time costs’ as your staff get up to speed with how the programme works. Add that to the hassle of adding annual updates (tax codes, rates, etc) and annual software support subscriptions. The overall cost of maintaining a payroll system in-house can become more expensive than you might realise.
Save on staff costs with outsourced payroll
Payroll staff costs can be considerable when you include everything involved – wages, cover for holidays and sickness, maternity/paternity leave, etc. Add to that all the hidden costs of employing someone such as office overheads, training, equipment, etc. Under-qualified or under-skilled staff can leave you exposed to expensive mistakes and penalties for non-compliance.
Payroll outsourcing is more secure
In today’s digital world, data is more vulnerable than it has ever been. Just like other types of mission-critical financial data, you want your payroll data to be kept safe and restricted from anyone who shouldn’t have access to it. Having this information handled by a discreet and trusted external expert is the best solution.
Payroll outsourcing ensures that only authorised people have access to payroll information. In addition, your outsourced payroll provider will be responsible for regularly backing up the payroll data and monitoring internal security issues relating to the handling of sensitive individual records.
The many advantages of outsourced payroll
As you can see, finding a trusted local payroll expert to take over all the responsibilities and duties associated with running an efficient and effective payroll department will save you money, time, and stress. If you have a large workforce (1,500 to 5,000 employees), read our blog Why you should outsource your large workforce Irish payroll to understand why outsourcing the payroll of your large workforce makes strategic sense.
Payroll is one of the easiest business functions to outsource, and typically businesses that have done so never go back to having an in-house payroll department. If you have questions about how outsourced payroll works, get in touch with us today.