Advantages of Outsourcing Payroll
Businesses, from small to large, can benefit from the outsourcing of their payroll to a third party company in various ways. These advantages include savings in costs, more thorough legal compliance, and enabling the prioritisation of core business functions.
There are various direct and indirect costs of processing the payroll of employees, which can prove costly to businesses. Working with an outsourced payroll provider allows companies to better manage and lower these costs.
The direct costs savings from outsourcing payroll, both in the short and long term, can be a substantial saving. The setup of an entire payroll department and all its associated costs, such as the purchasing of computer equipment and payroll software can be avoided. Not to mention the long term cost of having to employ employees such as payroll administrators and payroll managers including the rent of office space.
The less obvious but potentially far more substantial indirect costs saved from outsourcing is the amount of time spent by management on ensuring compliance with the rules and regulations, time spent managing conducting the payroll as well as the ensuing costs of failure to do so correctly. Non-compliance can lead to unanticipated costs such as settlements, SARS, fines and audits.
Outsourcing payroll will reduce the company’s exposure to the risks involved with labour.
There is a vast ever changing labyrinth of rules and regulations in dealing with payroll. Payroll providers stay up to date with all the rules and regulations and are far less likely to make serous errors than in house payroll providers are.
It is difficult for a business owner or an in house payroll manager to stay up to date with the various laws, rules and regulations, whereas a third party payroll provider have a team of dedicated staff, who specialise in payroll management and compliance.
Prioritising Core Business Functions
Outsourcing payroll improves businesses performance by alleviating management from this time wasting and often-arduous process. Business owners and managers can devote more of their time and focus on revenue generating activities.
The owners and management of businesses get instant access to an already established payroll system and the availability of professional advice from specialised payroll teams.
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