As a business owner, you may have asked yourself at one time or another whether you can afford to outsource payroll. We’d like to ask a different question: can you afford not to? Outsourcing non-core business functions has long been advocated for by business consultants. Yet, a number of business owners still find themselves in the same situation pay cycle after pay cycle, bogged down by unnecessary stress and paperwork. Here are five benefits to outsourcing payroll.
Outsourcing payroll reduces your overhead costs
Don’t be tempted to assume that managing payroll yourself or keeping it in-house will be saving you money in the long-term. The real costs extend far beyond wages for the person or team processing payroll in-house. Think of the hidden costs involved in recruiting, onboarding, training, and retaining staff; not to mention the risk of having to invest in these over again should your employee/s leave, knowledge in hand.
Payroll software and technology also come at a hefty cost. From time management software to automated payslips, if you want to administer payroll accurately and efficiently in-house, then these programs (and the training required to use them) add to the overhead costs.
Payroll services minimise payment errors
Generally-speaking, business owners don’t set out to over or underpay their staff. However, we see this time and time again through anomalies caused by manual error, lack of training, unfit software, poorly designed processes and so on. Even the smallest discrepancy reoccurring over years can lead to hefty fines and lawsuits, or losses to the bottom line which could have been avoided.
Further to the monetary cost of payroll error, is the risk of damage to employee relations and company reputation. Think of a time when you were given the wrong change, or someone paid an amount different to what you had invoiced them for. It doesn’t sit well does it? Payroll error damages trust in the business. In an age where company culture and intangible benefits are valued highly by employees, then it is crucial to get this right.
Outsourcing payroll ensures compliance
Unless payroll is your area of expertise, it’s a good idea to outsource it. The Australian government requires businesses to be compliant across National Employee Standards (NES), relevant modern awards, Single Touch Payroll, PAYG and payroll tax. With an in-house payroll team, you would need to provide ongoing training in order to keep up-to-date with government regulations and policy changes. On the other hand, choosing to outsource this function gives you the peace of mind that an expert team who are up-to-date with legislation have you covered and, more importantly, compliant.
Payroll services enables you to focus on your business
A good businessperson does what they do best. Except when they wear multiple hats and start becoming too time-poor to actually do what they do best! This is the risk of managing payroll in-house. Whether it’s a business owner or their line manager/s, the amount of time spent managing payroll and fielding pay-related queries detracts from their core function. It’s distraction at best and an administrative vortex at worst.
Outsourcing payroll enables the focus to land squarely on business activities that promote growth and generate revenue. It reduces the need to factor in time for payroll, let alone time and money spent in restitution efforts when unexpected issues arise.
Outsourcing payroll right-sizes the function
When it comes to business expansion, it’s beneficial to have providers with the flexibility to move with you. At some point, you could have the right number of employees perfectly balanced with the full utilisation of in-house payroll. However, with any growth (or reduction) in employee numbers, then suddenly the payroll team are either over-extended or under-utilised – neither of which makes good business sense. Outsourcing right-sizes the function of payroll, reducing the need to manage employee fluctuations in-house.
Should you be outsourcing your payroll?
Outsourcing payroll makes a lot of business sense when you consider the benefits in terms of cost, time-effectiveness, compliance and right-sizing. If you want to get back to focusing on your core business, then chat with one of our experienced accountants about the best options for you. Call us today on 1300 ARABON or visit our website for more information.