Benefits of Using Outsourced Payroll Providers

Outsourcing your payroll involves working with a third-party provider to streamline your payroll tasks and process. Outsourced payroll providers leverage expertise and technology to help you complete these tasks quickly and accurately.

You don’t have to manually work out the calculations or handle the administrative activities yourself. Outsourcing simplifies the process to reduce the stress associated with payroll tasks. 

To decide whether payroll outsourcing is right for you, let’s dive deeper into the benefits of using outsourced payroll providers in your business. 

Top 6 Advantages of Using Outsourced Payroll Providers

Using outsourced payroll providers in your business has dozens of benefits. But here are the top six. 

1. It Can Save Time and Boost Productivity in Your Business

Regardless of the number of employees in a business, payroll tasks can consume a great deal of time. For example, you must accurately track employees’ benefits, deduct applicable taxes, and send payslips to employees. Considering that you have other business activities, these tasks can be tiresome and time-consuming. 

However, outsourcing payroll processes to a reliable third-party provider leaves you with less work. As a result, you get extra time to focus on strategic tasks that take your business to the next level. For instance, the time and effort you’re using right now in payroll procedures can be re-channelled to streamline customer service and improve your business’ online presence. 

2. It Can Reduce Labor Costs 

Giant enterprises have the financial power to maintain reliable payroll departments. However, in-house payroll procedures are a money burner for small/medium-sized businesses. If you outsource, you can save a lot of money. Here’s a quick comparison you should do right now. 

Identify how much you spend on employees who handle payroll-related activities. Then, compare the amount with the pricing plans of an outsourced payroll provider to see how much you’ll save. 

3. You’ll Reduce Compliance Risks in Your Business and Potentially Avoid Paying Penalties

According to the Australian Taxation Office, as an employer you are responsible for taking care of your annual tax liabilities. Otherwise, your business may face penalties for neglecting legal obligations. The penalties often come from calculation errors, failing to file payroll tax statements on time, and deducting less than the law requires. 

Small business owners are susceptible to these mistakes because they aren’t experts in the world of complex and ever-changing tax regulations. The good news is that outsourced payroll providers can help you stay on top of tax requirements. 

After all, they have the skills, resources, and experience to calculate values accurately and file taxes on time. Eventually, you comply with government regulations and potentially avoid penalties that hurt productivity in businesses. 

4. You’ll Gain Access to Advanced Technology

With outsourced payroll service providers, you can access powerful technology that takes your business to the next level. For example, reliable third-party providers use robust payroll software programs, bookkeeping applications, and Human Resource Information Systems to offer multiple solutions.

As a result, you eliminate technology advancement costs in your business. You’ll forget the hassle of frequently updating payroll software applications to the latest versions. Even better, you’ll avoid regularly adjusting in-house technology to fit the most recent payroll tax tables. 

In short, third-party providers have the modern tools you need to keep your payroll running smoothly. 

5. It Improves Data Security in Your Business

Statistics say that 43% of cybercrimes target small businesses. That said, how safe is the payroll data in your in-house computer network? Do you have sufficient resources to future-proof your technology against malicious cyber-attacks? 

Outsourced payroll providers place measures that secure your payroll data against cybercriminals. For example, they use backup technologies and multiple server locations to streamline business operations in case of a cyber breach. Third-party providers also leverage powerful anti-malware technology to detect unethical activities before they bring disaster to your business. 

6. You’ll Access Accurate Reports for In-House and Accountant Use

Small businesses usually have less time to focus on payroll tasks, increasing the chances of mistakes. Outsourced payroll providers give you access to a reliable team that solely focuses on streamlining payroll tasks to enhance accurate reporting. With accurate reports, you can make data-driven business decisions. 

How to Choose an Outsourced Payroll Provider

You need to consider the following factors to help you choose the right payroll service provider. 

How Accurate Is the Outsourced Payroll Provider? 

Accuracy is a crucial factor when choosing a payroll provider. After all, what’s the point of paying for services causing wrong payroll tax calculations and inaccurate employee wages? 

Make sure you only partner with a skilled and experienced third party. Check the provider’s existence period in the industry, the methods they use to handle your payroll, and customer reviews (or case studies) on their websites. 

Does the Payroll Provider Offer Customised Packages? 

Basic payroll packages may work for now, but what happens when your business grows? The truth is that your compliance and payroll needs increase as your organisation grows. Therefore, you need a personalised payroll services package that grows with your business. 

Does the Payroll Provider Guarantee Data Security? 

Payroll data is super sensitive since it entails personal information. For this reason, ensure the third-party payroll provider has stringent cyber security policies put in place. 

For example, you need a payroll provider with data-backup solutions to avoid downtime in the case of a cyber breach. 

What’s the Cost of Hiring the Payroll Provider? 

Payroll outsourcing costs less than hiring an entire in-house team. However, ensure the provider doesn’t have any hidden charges. 

Why Outsource Your Payroll Processes to Visory? 

At Visory, we combine data, business processes, and people to bring you the best payroll services. The following factors make us stand out in the industry. 

  • We offer secure payroll services in Australia and abroad. Our cloud-based platforms operate under stringent cybersecurity measures to ensure your payroll data is safe. Our skilled professional team also manages your payroll to avoid data breaches. 
  • We reliably handle all your payroll tasks. That way, you get extra time to focus on core business activities that increase profit in your business. 
  • Accurate reporting. Calculation errors are the primary cause of payroll-related penalties. Our payroll experts are here to help eliminate errors and increase accuracy in your payroll tasks. 
  • Our prices are affordable. Each package we offer is only a fraction of the cost of hiring an entire in-house team. Plus, we have a custom pricing plan that ensures you only pay affordable prices for the services you’ll get. 

Learn More about how Visory can save you time and take your payroll process to the next level.

Why You Should Outsource Your Payroll Process

An expanding organisation outgrows many things over time. This might include working out of your home, printing your own adverts, and handling your own payroll processing. You can save a lot of time and energy by handing over your payroll to a trusted partner. 

Once you’re large enough, you may be able to create an entire in-house payroll department. But what about that stage where you don’t have the resources for full-time payroll staff but can’t keep asking executives to cut cheques? You outsource payroll. 

Let’s talk about the benefits of outsourcing your payroll service, and what virtual bookkeeping for professional services looks like in practice. Spoiler: tax time will be easier. 

How Does Payroll Outsourcing Work?

Before you entrust someone else to run payroll for your business, you want to know what they can handle. A virtual bookkeeping service may be your best option. You’ll have access to an experienced team that can tailor their services to your exact needs. 

When you outsource payroll, you’ll either give your contractor access to your payroll software or allow them to set it up for you. You’ll never have to worry about late paychecks again. 

Which services do payroll outsourcing providers offer?

It’s easy for a payroll period to sneak up on you. And if you enter tax information incorrectly, both you and your employee could be in some trouble at the end of the year. When you hand over payroll to a partner, they can:

  • Make sure the correct taxes are taken out. You and your employee will appreciate an accurate accounting of payroll taxes when it’s time to lodge your returns. 
  • Get forms signed. When a new employee comes on board, it’s important to get their documents sorted promptly and correctly. Your outsourced payroll partner can tackle these details. 
  • Handle benefits. If your employee takes a sick day or paid time off, you can trust your virtual payroll service to properly note it. 
  • Track time. If your staff are required to track their time throughout the week, a payroll service can handle it. Then, they translate the hours to the appropriate paycheck. 
  • Send funds. Perhaps most importantly, your payroll source can become accounts payable, ensuring that all employees are paid on time each pay period. You won’t have to rush to send off direct deposit money or paper cheques again. 

Benefits of Outsourcing Your Payroll Process

There are many reasons to outsource payroll. Maybe you’re just not great with numbers or you are becoming overwhelmed with other aspects of your business. While you’re seeking help with

online bookkeeping, it makes sense to sign up for payroll services. Here are just a few of the benefits. 

Save Time and Energy

You will have more time to focus on research and development, marketing, hiring and a host of other vital activities with payroll off your plate. You may not realise just how much of your energy is going toward calculating benefits and dealing with running payroll until you let someone else take over. 

Minimize Payroll Mistakes

Payroll mistakes can leave your employees in the lurch — a late payment could mean they can’t pay their bills. On the other hand, overpaying or forgetting to add vacation time could cost your company money. Financial mistakes are never good. What’s more, a mistake that doesn’t get corrected once could continue each pay cycle, including incorrect tax deductions. Leaving payroll to the pros will reduce the number of errors. 

Improve Your Data Security

Your employees entrust you with sensitive information, including bank details, when they submit payroll documents. When you outsource payroll you can increase peace of mind. Payroll experts know how to guard important personal data. 

Reduced Costs

Payroll mistakes can get very expensive. So is hiring someone full time, especially if you are still a small-to-medium size business. Paying a contractor may be a more cost effective way to get your payroll done promptly. 

Help Filing Payroll Taxes

Your payroll contractor can also ensure that your taxes are lodged the right way. This can mean you avoid fees during tax time and save your employees from explaining why they underpaid. Tax rules change often; you won’t have to stay on top of the tax code when you have an expert on the case. 

Maintain Compliance

Payroll assistance also keeps your business compliant with any financial reporting or payroll laws for your industry. Regulatory compliance may be required at the state or national level. Hand it over to your outsourced payroll provide so you don’t have to make heads or tails of complicated compliance rules. 

When is it Time to Outsource Payroll?

If any of these signs sound familiar, it may be time to get some help with your payroll. 

  • You are growing as an organisation. If you’re the founder of a company, it’s natural to outsource services as you scale up. 
  • You missed a payroll period. If you’ve ever gotten so caught up in other work that you forgot to pay an employee, you should call in reinforcements. 
  • Your finances are becoming complicated. Whether due to growth or other causes, if your accounts receivable is already keeping you up at night, why not take payroll off your plate?
  • You are hiring for the first time. You may have a small trusted group of people in your company for the first several years. As you hire from the outside to add to your team, you should also bring on a payroll pro.

Deciding to outsource payroll is a wise move for many businesses. Whether you are growing as a company or just confused about tax deductions, an outsourced payroll professional will be a lifesaver. You can focus your attention on things like marketing and rest easy knowing your paychecks are going out like clockwork. 

A company like Visory will pair you with a team of payroll experts. They will know your industry and allow you to add more services as needed. Before you know it, your outsourced payroll team member will be a trusted extension of your company.

Top 10 Benefits of Outsourcing Payroll

For an expanding organisation in Australia or New Zealand, growing payroll needs can cause headaches. Are you applying the right tax rate? Is your software able to scale? Are you compliant with government regulations? One misstep, and soon you’ll be buried in some serious paperwork or worse—you might miss a pay period. Fortunately, there are financial experts who can help you handle payroll. From paying employees to setting up new employee accounts and remaining government compliant, a trusted payroll partner can shoulder the burden of your payroll process, so you don’t have to.  The benefits of outsourcing payroll can’t be understated. 

Here are 10 reasons to call in reinforcements for your payroll systems. 

Benefits of outsourcing payroll

Time savings

When was the last time you assessed how long it takes to process your monthly payroll? Even when the system is streamlined, your staff has to keep on top of paid time off, sick days, paid bonuses, and tax changes. An outsourced team of managed payroll experts frees up your back office to worry about other things. 

Government compliance

Payroll taxes and thresholds vary based on state or territory, as do the required deductions in New Zealand. For instance, do you know the appropriate non-notified tax rate in New Zealand for an employee that does not provide a completed IR330? Spoiler: It’s 45%, but you could run into compliance issues if you miscalculate it. You’ll save money in the long run when you remain in compliance with tax regulations. 

Money savings

You won’t only save money on avoided compliance penalties when you outsource your payroll needs. The benefits of outsourcing payroll also include saving on overhead costs. When you don’t have to shoulder the on-costs of a full-time payroll expert in-house, you can use that cash for product development and more. 

Security

Your payroll system includes the sensitive data of your staff. Should the system ever be breached, identifying information could be stolen. There is frankly tonnes of risk in handling payroll as a side project as your business grows. A trusted payroll company will have the digital infrastructure needed to keep your information safe and sound. 

Team of experts

The skills required to be a payroll officer vary. It helps for a person to have a degree in finance, but at the very least, they must be comfortable with both maths and communication. A payroll officer not only processes all payroll transactions but also updates payroll systems, calculates employee income, handles Jobseeker payments, generates financial reporting, clears discrepancies, and more. Having a whole team on your side means you don’t have to search far and wide for the perfect employee. 

No risk of losing staff

Speaking of finding an ace employee—what happens if you find one, train them, and then they leave? You’re back at square one. Outsourcing with Visory means you always have payroll support without fear of losing your payroll pro unexpectedly. 

Save on software and infrastructure cost

Accounting and payroll software can be expensive. Plus, your software can’t do everything for you. You’ll still need to ensure you’re using the proper tax tables and the software is applying the most modern government compliance standards. One of the benefits of outsourcing payroll is that your new team will always invest in the most up-to-date payroll software so you don’t have to. 

Eliminate paperwork

Outsourcing payroll also allows you to eliminate heaps of paperwork. Not only is this more convenient and efficient, but it can help reduce the chances of fraud. Outsourcing your payroll means you aren’t responsible for the paper trail of payroll; someone else saves all the documents for you. 

Simplify HR

Right now, you may have HR handling payroll along with hiring, firing, and planning business events. When you take payroll off their plate, you allow HR to specialise in what they do best — managing your employees’ needs and interviewing candidates. Visory will act as an extension of your HR department, fielding the questions your HR team has historically been inundated with. 

Peace of mind

Outsourcing payroll adds up to one conclusion: More peace of mind. You have one less thing to worry about and never have to fear leaving your staff in the lurch because you failed to process their pay on time. You can focus on growing your business, not running payroll.

Visory is here to meet your payroll outsourcing needs. Between the added security and compliance consistency, you’ll be glad you paired with payroll pros. Sign up today to learn what we can do for your organisation. 

 

Single Touch Payroll – Are you compliant?

Businesses with 20 or more employees were required to commence reporting from 1 July 2018 unless an exemption or deferral was obtained.

We have seen a number of small businesses proactively commence with STP early, with initial feedback being very positive following the transition.

According to the ATO, there are approximately 750,000 small businesses across Australia with 3.8 million employees. Microbusinesses with 4 or less employees account for 60% of this sector. Software provider Xero has estimated that 1 in 5 businesses in Australia still use pen and paper for payroll record keeping purposes. This poses potential risk for these businesses in migrating historical or back of the envelope data if it exists at all.

So why the change to Single Touch Payroll for small business?

The reason for change stems from current problems that exist within the payroll reporting framework. The Federal Government, as part of their review into non-compliance within the Superannuation Guarantee System, identified three main areas that needed to be addressed:

  • High compliance costs and regulatory burden
  • PAYG Withholding and SG non-compliance
  • Inefficient Government service delivery

High compliance costs and regulatory burden

Under current law, a small business has multiple compliance obligations that contribute to high compliance costs and regulatory burden. As a small business owner, you will undoubtedly have this experience. A simple example of this is the payment of weekly wages in early January. That one payment results in the following obligations:

  • A payslip is to be generated and provided to the employee at the time of their net salary being paid
  • PAYGW to be reported and paid via an IAS or BAS either by 21 February, 28 April or 28 May, depending on how you lodge the BAS (electronic or paper)
  • Superannuation guarantee attributable to that salary will be required to be paid by 28 April of that year
  • The wage will be required to be included on an end of year Payment Summary that is to be provided to the employee by 14 July of that year
  • That end of year Payment Summary is to be incorporated into end of year Payment Summary Annual Report which the Employer needs to provide to the ATO by 14 August

The above excludes other employee reporting obligations such as Workers Compensation and Payroll Tax.

PAYG Withholding and SG non-compliance

There are some well-known drawbacks that result from the mismatch in timing of making a net salary payment and ultimately the payment of PAYGW and Superannuation Guarantee. These include:

  • Unnecessary reconciliations by the employer
  • Cash flow management difficulties resulting in employers “dipping” into super and PAYGW to settle other liabilities
  • Unfair playing field between compliant and non-compliant small business
  • Loss of retirement savings for employees
  • Future cost to government to support aged pension for these affected employees
  • Little visibility for employees to monitor payments of SG

Often the delay between the non-compliant activity of an employer and recovery action sought by the ATO is well in excess of 12 months. With employees having little visibility of when superannuation payments are made and the ATO’s inability to actively monitor compliance in real time, often non-compliant employers are insolvent by the time an employee makes a complaint or the ATO catches up with them. More often than not, there is little to no opportunity to recover these unpaid amounts which ultimately places pressure on future Government spending.

Inefficient Government service delivery

The Federal Government is clearly aware that they need to improve and can improve on their service delivery. In the “Digital Australia – State of the Nation 2014” report, the Government ranked as the worst business sector in terms of digital sector experience. Clearly there is a better way in which to improve both employer and individual’s experiences when interacting with the ATO.

Benefits of STP to small business

STP has undergone a rigorous consultation process over the course of the last three years to ensure it aligns with the natural business systems of an employer. The primary aim being to work with business to avoid creating additional compliance. The benefits of STP are anticipated to be far reaching, including:

  • Help employers streamline their reporting process to the ATO
  • This information will be used to pre-populate the wage and PAYGW sections of the BAS which will eliminate potential errors and double handling
  • Eliminates the need for payment summary processing and end of year reporting obligations
  • Employees will now have real time access to payroll data via their MyGov account
  • Allows the ATO to proactively monitor payments of PAYG and superannuation guarantee earlier and notify employees of non-compliance – complying employers will feel like they are now operating on a level playing field.

The risk to small business

From an employer’s perspective the major risk is around the accuracy of salary calculations, utilising technology that they previously were not familiar with and the damage to brand for non-compliance. The ATO will now have immediate information regarding PAYGW and superannuation and can act accordingly should they see discrepancies. This can also be compounded by incorrect reporting of payroll tax and workers compensation amounts which may result in an investigation by the relevant governing bodies. We expect government authorities will only continue to improve their information sharing capabilities as further real-time data becomes available.

Fair Work has already taken action and handed down significant fines for businesses and owners that have been found not to be processing salary and superannuation payments correctly. Even minor breaches can result in significant financial cost to the business once on-costs such as payroll tax, workers compensation and the potential for fines and penalties are applied to both the employer and director.

Next Steps

Be proactive in preparing for STP. If you are processing your payroll in-house, ensure your software is up to date and STP compliant. Alternatively consider what other options are available to you. A good digital payroll solution will not only be STP compliant but will provide other tools such as employee self-service, time and attendance functionality and allow for award interpretation that can be built into the software.

Outsourcing your payroll function can also be a relatively inexpensive option. It provides you with the added comfort of knowing the payroll is compliant, processed by a payroll professional who can also provide advice in relation to various employee related matters. They will use the latest in technology to provide the benefits previously mentioned and provide an overall better experience for your employees

If you have any questions relating to the introduction of STP, please contact the Visory team today.