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Outsourcing

The administrative hassle surrounding the payroll process makes it the business function that is most often outsourced. This makes sense as most SME’s don’t have a dedicated in-house accountant. The Payroll process can be a complicated process, even when small businesses have a minimal number of employees.

When deciding on whether to outsource your Payroll Processing, you need to consider a number of important factors.

The benefits of outsourcing

The first factor is the financial cost. This is the cost of doing your own payroll vs. outsourcing this service.

Cost of doing your own payroll includes:

  • Salary of the payroll clerk or man-hours needed to perform the task,
  • Payroll system training costs,
  • Annual Payroll system license,
  • Payroll slip printing,
  • Tax compliance documentation,

After this figure has been calculated it needs to be compared to the quotes received by potential service providers.

But, it's not always about the money.

Resources

What would or does it cost you to have an employee managing your payroll? Another major concern is how much time it consumes of that employee’s the work day? If this function were outsourced, could you re-allocate that employee’s time more effectively? This employee could then be tasked to assist in the activities that actually make your business more profitable.

Responsibility

A correct and accurate Payroll is paramount to the success of your business; it affects your employees and if the payroll is not performed with 100% accuracy you may find your business being in contravention of the tax laws and SARS. Payroll service providers take this responsibility on when you outsource your Payroll to them. You also have legal recourse if the service is found to be negligent or fraudulent.

Consistency

When you have an employee running your payroll, disaster could strike if that employee calls in sick or goes on leave over your payroll date. The employee also has to be well trained to be prepared for any variation in salaries. A Payroll service provider will ensure your payroll runs every month like clockwork, and has the systems and procedures in place to deal easily with any eventuality.

Compliance

When outsourcing your Payroll, you don’t need to go on training to keep up with Tax laws and compliance issues. A good service provider will do this for you and automatically update you with relevant issues. It is also quite important to outsource to a service provider that deals with small businesses.

Security

Payroll service providers are legally bound to keep all employee files and personal information highly confidential. If you employ someone to run your payroll in-house, you need to ensure you have proper systems and security measures in place to protect the privacy of your employees. When you outsource your payroll, none of your employees will have access to any salary information and confidentiality is ensured.

Less hassle

Your business needs to get on with the business of doing business. Outsourcing your Payroll, a non-value adding activity, you won’t need to worry that everything will get done properly and on time.


     
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