Today, many companies choose to outsource some services due to various factors. One of which is the lack of human capital to do the work as well as the lack of skills and appropriate facilities. Payroll on the other hand, is one of the most commonly outsourced services in a business. Many business owners believe that it is a great strategy to improve their business and maximize profits. Tons of payroll providers are out there with similar goal to offer; make the clients work life simple and stress-free. However, with the lack of careful planning and consideration to best practices, the whole payroll process can get chaotic.
If you are looking for the best payroll providers that will give you excellent client experience, you first need to jot down a few benchmarks for selecting one. Get to know how do these services work and create a list of the things you want to get done. Outsourcing your payroll can be daunting because there are some important factors which you need to consider before handing the job. Moreover, this article will give you a brief definition about payroll agencies’ duties. You will also know some of the important dos and don’ts in payroll outsourcing.
What Do Payroll Services Do?
A payroll service is defined as an outside company that specializes in payroll processes. There are four different types of payroll systems based on the article Types of Payroll Systems – SmallBusiness.com which are the following:
- In-House – is a type of payroll processing that is practical if you have a fairly small business with employees not more than ten. If your payroll needs are not that much complicated, an on-site employee may easily use payroll software to manage each process and be readily available to answer questions and deal quickly with any issues. In an in-house payroll system, the employee/s in-charge must stay up-to-date and should be knowledgeable with staff changes and tax laws regarding payroll for accurate payment, tax withholding and filing. The good thing about this type of payroll system is that you have little chance of putting your financial data to security risk since you’ve got full control of the job.
- Bookkeepers and CPAs – if you want real professionals to handle your payroll, this type of payroll service is the one to go for. However, some bookkeepers and certified public accountants prepare payroll and tax records but do not offer banks interface services like direct deposits or 401(k) deductions. When choosing to outsource in this type of payroll provider, be sure they have enough expertise in the services you need and are flexible in accommodating last-minute changes to avoid processing errors.
- Payroll service – as mentioned a while ago, payroll services are third-party agencies that does the payroll processes for your business. This type of service provides specialists and experts on payroll taxes and other regulatory requirements. They provide administrative services such as direct bank deposit and automatic deductions of taxes and other fees from employee paychecks. If you are thinking about outsourcing to a payroll agency, be meticulous in choosing one. Do thorough research and read reliable reviews of payroll providers to make sure you only get the best service.
- Online Payroll – this type of payroll system is provided by an outside company. It allows you to monitor and manage payroll details 24/7 via secure web browser. You no longer need to purchase separate software and equipment to avail this service. The great thing about online payroll system is that you can update payroll, track employee sick and vacation leave and update payment at the convenience of your personal computer or laptop. Online payroll systems offer payroll tax filing as well as payment on top of basic payroll services it offers.
What to Do When Outsourcing Payroll?
- Do Proper Consultation
When choosing to outsource your business’ payroll processes, the first thing you should do and put priority on is proper service consultation. Allocate some time to peek through a payroll service provider’s experience and expertise. An excellent payroll service knows the ins and outs of every payroll processes. When consulting a particular service provider, be sure to look into their background and area of specialization as well as their team’s educational background. A good service will have no issue being transparent to those things.
- Do take Note of the things to outsource and what you can handle in-house
You should know what payroll processes are needed to be outsourced and what are the ones you can handle in-house. You should only outsource selected payroll tasks and keep special ones internally. Provide a clear and comprehensive list of the things you want the service to do for you. You may also ask how they are going to handle the job. This step requires careful planning as you do not want to miss something. Do not rush in making the list. Have a meeting with your payroll or HR department to make sure nothing is being overlooked.
- Do take the payroll professional’s advice
Upon consulting with a professional payroll specialist, you also need to take advantage of their recommendations and advice. As a professional in the field, they have better the knowledge of the big picture. Therefore, it is your chance to ask for advice about the current dilemmas of your payroll department. Although you opt to outsource your payroll, the knowledge you gained out of a payroll professional’s advice will come in handy if you decide to do your payroll in-house in the future.
- Do be honest with your company’s payroll issues
When choosing to outsource your company’s payroll, you issues and existing problems cannot be solved by the service if you are not upfront about the existence of such things. You need to look deeper at your special cases and come up with a comprehensive documentation. Include everything that gives you headache. Through this, the payroll service will be able to prepare accurate action to solve such issues and will be more effective with their work. If you do not want to expose special cases and issues you are dealing with, outsourcing would not be the best idea as it might just make the situation worse.
- Do realize that when you outsource payroll, you are creating partnership
Outsourcing your business’ payroll means you are building a relationship with another entity. Therefore, both of you should work together and must be open to communicate from time to time. The payroll service provider should not do the job alone; you must take part with adhering issues and other important payroll related tasks too. Being proactive is the key to maximize partnership and attain success.
What Not to Do When Outsourcing Payroll?
- Don’t rely the entire consultation via email
A lot of business owners and managers make the mistake of conducting the whole service consultation process via email. This happens not just with payroll but also with other services. The problem with email consultation is that words can easily get sugar coated and you do not have the guarantee of full transparency. If possible, meet with the firm to thoroughly discuss the job. If meeting the service provider in person is hardly possible, you can do video conference and talk to its specialists.
- Don’t dissolve your payroll department altogether
This is very essential and should be given prior importance when choosing to outsource your company’s payroll. Dissolving your company’s payroll department altogether is a massive no-no. This is one of the most common mistakes business owners commit. Transferring all payroll tasks to an outside company is not ideal as it may result to conflict of interests and can also demoralize your people in-house.
- Don’t neglect to reassure your employees about their new roles
When you finally picked the payroll firm of your choice, make sure you assure your employees about their new responsibilities. This is important because most of them might think they are going to lose their job since the other party has more expertise than them. This is a natural reaction from your employees. As a business owner or manager, it is your responsibility to speak with them about their new roles and the change in management that is about to happen.
Conclusion
Outsourcing any service to another company should be given enough time for planning and decision making. Success is impossible if you rush everything. Payroll outsourcing is excellent and beneficial to a business if you know how to select the right payroll company and utilize its expertise. It helps improve efficiency, save costs and streamline every process. Be sure to take note of the dos and don’ts mentioned in this article to ensure success and enjoy the advantages stated.
So, there you go! Those are the basic dos and don’ts in payroll outsourcing. Anything you want to add up?
P.S
If you are looking for the right payroll provider, look no further as you have come to the right place. CrowdReviews.com provides you genuine and reliable reviews of payroll providers. You may also want to check the latest recap of the best payroll providers.
John Tovar
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