Why Payroll should be outsourced 1st?

Working in the HR industry for close to a decade now I come across a lot of companies asking me the same question, “What do you think? Is outsourcing payroll is the right thing to do?”. Here in this blog let me try and answer the same question. If satisfied then surely go for it. So let’s begin the blog.

In the market, you come across 3 types of companies when it comes to handling payroll, they are

1. Companies that handle their payroll in-house but manually.
2. Companies that handle their payroll in-house through some HRMS software.
3. Companies that outsource their entire payroll activity to an expert 3rd party provider.

While keeping in mind all the concerns which most of the organizations have (like keep yourself updated with all the government taxes, laws, and rules, time consumed every month for processing the payroll, regular timely payment of those taxes, and compliance to the respective authorities, likewise) we came across a poll carried by an esteem HR service provider. It says

• Around 39% of companies run payroll manually
• Around 23% run through a desktop software or app
• 22% through some web based or cloud HRMS solutions
• And rest 17% think of or have already outsourced their payroll

Looking at the above stats if you are still confused about whether to outsource your payroll or not, then let me help you by letting you know some of the sure short benefits you will be getting if you do so. If you think reading is a pain for you then you can also enjoy the video on the same topic below.

Time is Money?

Who other than you as a business owner will know how valuable time is. Running payroll is not a cakewalk and I think you will surely agree to that. Payroll starts the day you recruit your 1st employee. Thus be it a 1 employee firm or a 1000+ employee one, processing payroll requires time, expertise, and perfection. Thus few of your resources are constantly into it doing the same repetitive work on a daily, weekly, or monthly basis. If not then this time can be easily utilized on other business-related productive activities. In the end, you started your business to grow it and not to do repetitive activities.

Once the payroll is outsourced to an expert service provider, business owners can ask their resources to invest time in more productive work which can help to grow the standards of an organization. Here they will only act as a supervisor to check if the payroll process is going smooth that too once in 2 days or a week.

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Small Tasks, Big Trouble?

Even though you are not outsourcing payroll but using some awesome HRMS software, then to your manual activities still remain the same. Few mentioned below:

• Investment declaration/verification to save employee taxes.
• Flexi benefits, business reimbursements, etc.
• Variable pays, Overtime, Bonuses, Sales incentives, etc.
• Arrears, Appraisals, etc. the list will go on.
• Generating Form-16, reports, etc.

This is just one side of the coin, here I’m not even talking about the number of follow-ups you need to do to get this data in. Till the time you don’t get the data in place forget about running the payroll on time.

Once outsourced, the outsourcing provider bifurcates few of these tasks to themselves and keep you away from handling cumbersome activities. Their checklist approach makes sure that they don.t miss anything and your payroll process is as smooth as butter.

Compliances are key?

Reading till here let us assume that you smoothly ran your payroll, do you think you are done for the month? No, here comes the compliances. No HRMS software in India till today as I write this blog can file your compliances automatically. This means it’s a completely manual process to be undertaken every month. Any delay in filing these compliances can attract penalties, summons, inspections, etc. and this is the last thing you as an organization want in your business.

Outsourcing payroll again helps you in keeping away all these troubles and reminders, plus a stress-free time to make some awesome J-Curve strategies for your business as nothing is bothering the back of your mind.

Handling Employee Support and Queries?

Nothing is worst than starting your day with a not-so-good conversation with an unhappy, frustrated employee. An employee usually has lots of queries regarding their salaries so be it regarding earnings, deductions, variables, salary-slips, taxes, etc. If your companies employee strength is small then you can at least think of handling their queries but what if the strength is strong? You as a business owner or you as an HR will never want to handle those queries on regular basis leaving your core important work. This results in poor TAT and complaining employees.

Outsourcing resolves this problem as the Service Provider himself takes care of the support and query resolving activities for all the employees. They do have dedicated trained team for that thus a lower TAT.

Payroll mistakes, A Big NO!!

This is the biggest problem any organization faces which is mistakes in payroll calculations. Any mistakes in salary calculations result in less/high salary pay to the employees. Incorrect compliance/tax calculations thus you end up filing wrong monthly/quarterly/yearly returns. We are humans and humans tend to make mistakes but figuring out where the mistake happened is again a time-consuming process. What if you don’t even know that there is a mistake and you keeping on filing wrong periodic returns? The worst nightmare any company can dream of eventually, you end up paying huge sums in penalty.

Outsourcing again comes as a savior here as the Service Provider has a well-defined checklist process and some even follow the variance check method. In the variance check method, the Service Provider compares this month’s payroll with last month’s payroll for any variance. If found can be rectified easily.

They are Experts & Always Up to Date.

This is one of the best benefits of outsourcing payroll and one of my favorite one too. Let me explain you the same with an example:

• Whenever you are sick you go to a Doctor, why not Carpenter?
• Once you got robbed on the street post that you decide to file a complaint with the nearby Dentist. Will that ever happen? You will surely head towards Cops.

The reason is very simple, because you know they are the one who are experts in their individual fields and you can rely on them. Similarly, I believe every organization should outsource its payroll and compliance to this Payroll experts to get their things sorted every month. Few reasons:

• They are the best in what they do.
• Have a well-defined process and a backup plan too.
• Stay always updated with the latest government norms.
• Follow industry best practices depending on the sector they cater to.

Conclusion:

After reading this blog if you feel that your organization also faces all these issues then outsourcing your payroll and compliance is the right option you should opt for. But make sure to choose the right Service Provider among the huge competition around.

If you are still confused about whom to choose, HR Deck can come in handy here. Their Experts can have a detailed discussion with you and guide you accordingly. Don’t worry consulting is absolutely free of cost. So why wait? Call now on +91-9869 847 857 or email on support@hrdeck.in