3 Considerations to keep on the Top of your mind before Outsourcing Payroll

3 Considerations to keep on the Top of your mind before Outsourcing Payroll

Payroll management is one of the most complex functions in an organization. It is also just as significant as sales or customer service. Be it your reward policy, compensation system, or retention strategy, your payroll department is responsible for ensuring that these frameworks are in line with laws.

There are tons of tax rules, codes, and regulations to be carefully studied and complied with. Also, with changing organizational structures (think remote working) payroll is getting even more challenging. Companies not only have to comply with rules set for their own geographic areas but need to consider laws where their employees reside. Needless to say, payroll management is no easy task.

Moreover, mistakes in calculating payroll not having carefully understood any of these standard practices can be extremely costly. You cannot afford to go wrong with your payroll management. That’s where payroll outsourcing comes in handy.

Professional and learned payroll professionals have made life much easier for such businesses lending their expertise to help beat the tough challenges of payroll management. That said, because payroll management is a core strategic function many businesses think twice before outsourcing it. If you too are considering outsourcing payroll but are unsure how to go about it correctly, this article will help as your go-to-guide. We’ve listed a few tips that you must follow to make sure your outsourcing decision is on point.

Know what payroll function you wish to outsource

If you are a small or medium business it makes sense that you don’t hand over your entire payroll management to an outsider. You can test the waters first by outsourcing only one or two functions. For example, you could outsource filing government reports and employee pay management. And, choose to internally manage administration of employee benefits.

Decide the kind of authority you want to lend

You could consider outsourcing a payroll service provider who prepares payroll tax returns. While the service provider prepares the tax returns, it is you, the employer, who actually files the returns. This kind of outsourcing gives you more control over the tax filing process. In contrast, there are reporting agents who can be outsourced if you are okay lending a little more authority to someone else. The reporting agents not only prepare the tax returns but also sign them on the employer’s behalf.

Double-check the service provider’s credentials

Before considering any outsourcing agency or professional provider ask for a proof of credibility from them. You must verify that the professional service provider you are considering for your payroll outsourcing:

  • Has a good knowledge of each and every aspect of the local and national tax regulations
  • Is well-versed with updating all the associated forms
  • Is up-to-date and adept with accurate tax deductions norms
  • Knows how to calculate and submit payroll taxes
  • Is adept with handling Social Security and Medicare deductions
  • Understands compliance with respect to state and local tax guidelines and adjusting payroll figures

The tips shared above are enough to help you shortlist the right payroll outsourcing professional or firm. It would also make sense to cross check their reputation in the market doing a bit of internet research about the service providers. With this, you are set to outsource your payroll management to a professional who can do the job perfectly to the T.


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