Payroll is time-consuming, complex, and expensive. No wonder, across all HR functions, payroll is among the duties companies outsource mostly.
When it comes to international business growth, payroll outsourcing becomes more pronounced as the compliance risks and complexity linked to payroll processes increase exponentially.
Although having your payroll run externally can reduce the burden on your global expansion and HR teams, it requires careful preparation.
This is because outsourcing payroll services in a few countries and creating great payroll strategies that work for your business is complex. This is why, like most companies, you should look for the right steps, such as the following, to outsource payroll services:
1. Know How Outsourcing Works
Hiring a service provider like BoardRoom means you may need to share information about your employees with them. Ensure you have the right DPA in place to avoid legal issues if outsourcing service mishandles payroll data. Some of the employee data your payroll service provider may require to include the type of contract, hire date, job title, pay rate, and personal details, to name a few.
If your workers use time-tracking software or time cards so they can keep track of working hours, the payroll service provider will require that information, too, to accurately calculate payments and deliver them through direct deposits or payroll checks.
Payroll service providers may handle payroll taxes and ensure you stay compliant with the local tax regulations, irrespective of where your workers are from. That said, you should deliver tax forms as well as other details about your employees, such as ITINs or social security numbers.
2. A source at the Right Time
While most businesses in the United States internally process paychecks, it is only sometimes affordable. At the bare minimum, internal payroll processing needs the purchase of manual accounting programs or a computer and intensive training to use them.
Additionally, businesses have to be updated on changes in tax requirements, deadlines, and personnel on a regular basis. Using payroll services generally makes sense if your payroll processes change with every pay period.
If your business has workers working different hours every work and has a turnover rate, payroll outsourcing Singapore services can be a cost-effective and time-saving alternative to internal processes. Plus, using payroll services will be important if you need to pay payroll taxes for several states.
3. Compare Providers
Engaging in talks with a few service providers will enable you to evaluate the weaknesses and strengths of the proposal they have put forward. Using rating systems can help you to outline who is a preferred candidate.
It is crucial to understand the depth of services provided by different providers. This will help you clearly understand which processes are kept internally and what can be outsourced.
4. Find Payroll Services That May Grow with Your Company
Businesses basically don’t start their entrepreneurial journey with 300 workers globally. But this doesn’t mean it can’t expand into that.
When searching for payroll outsourcing Singapore servicing, ensure you ask potential providers what services they provide so you may use them t grow your business.
If you are starting out with three or ten employees and all will be part-time workers, then it means you won’t have a lot of needs, which a payroll company should handle.
But as your business and its needs grow, full-time workers will be mandatory. And at this point, you will need a good payroll service provider to handle various tasks on your behalf.
Make sure you choose a company that provides such services if you believe you’ll require them along the way.
Although switching from a payroll service provider to another is relatively easy, it will be much easier to stick with a provider who understands your needs and is willing to grow with you.
5. Determine the Timeline
The outsourcing timeline for payroll service is an important aspect to look at. For businesses that have already started outsourcing payroll services to professional companies, scheduling a switch at the right time is important for an effortless transition.
This may mean waiting for the quarter or end of the year so that you can make a switch. And in some situations, the end month works just great. This all depends on your business particulars.
This transition can be easier and happen anytime for smaller businesses not outsourcing payroll services. But then again, it all depends on your business and service provider.
6. Inform Stakeholders in Your Company
Once you have the ball rolling on using payroll outsourcing services, inform stakeholders within your business.
Effective change management is paramount when making some updates to the service offering. Take time to communicate changes to every member of your business so they can be informed and empowered when talking to clients.
For those operating payroll services, make you train them well on using payroll software. They must be comfortable speaking all the practice areas to make clients confident.
7. Look at the Retirement Plan Management
A vital part of payroll outsourcing services is your 401(k) plan since workers contribute a lot when it comes to their pre-tax dollars.
Most payroll software solutions can easily be integrated with a 401(k) provider or provide in-house maintenance services for retirement plans. Look for outsourced payroll services which can manage retirement plans for your workers.
Usually, worker contributions to a traditional 401(k) plan are pre-tax. This means they minimize federal income tax withholdings. An employer contribution to a retirement plan also helps to decrease employer-pay payroll taxes, like state and federal unemployment.
The Bottom Line!
Once you identify your preferred payroll service provider, it’s time to sign a written contract and start outsourcing payroll services. When considering contracts, ensure you put the long-term costs of the payroll services into consideration.
Some payroll companies offer initial discounts as a sort of signing-up bonus. But ensure you are comfortable with what the costs are. Plus, if you are planning to add more employees and expand the benefits over time, this may mean more monthly costs. So you should get prepared for all this.