Over the last few years, payroll outsourcing has been in practice among many businesses in Perth and other cities in Australia. As the days pass by, it is facing enormous growth. Australian companies that had ignored this service in the past are now preferring it. The main reason is its easy-flowing nature and numerous benefits. Payroll outsourcing can reduce the risk, make managing and implementing plans easier, increase return-on-investment, and make payroll processing faster. This blog discusses all these advantages of outsourced accounting services in detail.
What is Payroll Outsourcing?
In general, a business has to take care of various services, processes, and functions. The payroll process is one of those functions and is required if the business has a specific number of employees. These processes can either be carried out by an in-house team or handed over to an external organisation. When a business contracts with such an external body to provide the service, it is called outsourcing. One of the most typical forms of outsourcing is payroll outsourcing.
This process may be carried out by a specialist payroll company or an accountancy firm. Some businesses also prefer having a hybrid model, where an internal team manages a few functions, and a third party manages some. That model is called ‘payroll co-sourcing.’
One point to note here is that some professional bookkeepers in Perth can also handle the payroll. So, based on your requirements and financial limitations, you can discuss the matter with a bookkeeper, too.
What are payroll functions usually outsourced?
Payroll processing refers to not a single activity but a group of functions that are carried out altogether. So, when you outsource a payroll service, you will generally outsource several functions, which are as follows.
Setting up employee payroll accounts
In this step, payroll professionals gather all the necessary details of the employees to set up their payroll accounts.
Setting up a payment method
Next comes the payment method. Whether the mode of payment involves direct deposits or automatic payments or paying through paychecks is established.
All applicable payroll and income taxes are withheld.
Remitting payroll taxes to the Australian Taxation Office (ATO)
Being an owner of your business, you must keep in mind that even if the payroll service is outsourced, the employer must remit taxes to the ATO. So, you have to be well aware that you will be held liable for any payments.
Managing applicable employee deductions
These deductions include workers compensation and health insurance.
Managing tax forms and declarations
The outsourced payroll company will also manage any tax forms and declarations at the end of the year.
What Are The Key Advantages Of Outsourcing Payroll?
There are several significant advantages you can enjoy when you outsource a payroll service.
Payroll experts can handle the whole process
The most significant benefit of payroll outsourcing Perth is that experts who have the proper knowledge and experience required here will take care of the whole process. With the number of payroll service providers increasing, more business organisations are choosing to outsource their payroll processing.
A qualified payroll professional has the adequate skills to handle the entire procedure accurately. Thus, there will be fewer errors when it concerns payroll tax filings according to state and federal government and tax benefits.
In Australia, there are several complex employment-governing laws at both federal and state and territory levels. These laws cover minimum terms and conditions, minimum pay rates, leave entitlements, employment termination, public holidays, privacy, workers compensation, jury duty, superannuation and taxation (including fringe benefits), and record keeping.
Under the Fair Work Act, which is the primary law in Australia that governs employment, HR professionals, company directors, accountants, payroll officers, and franchisors are liable to prosecution if their businesses violate the terms and conditions of this act. But when you outsource your business’s payroll processing, specialised experts will look after the whole procedure, thus ensuring that your business remains compliant with all the regulations. In addition, you will also get valuable suggestions on the best approaches on how to manage the payroll.
Better use of technology
Businesses sometimes subscribe to several different technological solutions for rostering, accounting, payroll, HR. etc., or use only the basic payroll features available in their accounting software. As a result, they cannot enjoy the benefits of the most advanced technology associated with the leading payroll software of today.
Also, if you have an in-house payroll management team, you will be required to invest in providing them training when a change in technology takes place.
On the other hand, top-rated payroll providing services use advanced software that ensures the safety of the employees’ data. Because the payroll system involves a significant quantity of personal information, this service has immense importance. Payroll outsourcing also reduces the risk of identity theft and internal data breach.
Prioritising core business
Outsourcing payroll will help you give more time to your core business functions. Payroll is not a core business function, so any resources and time you invest in it mean less time you will have to concentrate on your revenue-producing activities. With an expert looking after all the necessary calculations and pay compliance, you can use the time to focus on the areas related to core business matters like sales, customer services, and marketing.
It will save you money
If you choose to have an in-house payroll management system, it will cost you a lot of money. Apart from the costs of maintaining payroll software, you will need to bear costs like salaries for the payroll workers, necessary training and recruitment costs. But, when you outsource payroll processing, you can save almost 75% of your payroll overhead costs for your small business.
Whether you choose payroll service providers or bookkeeping Perth for outsourcing payroll, you must consider several factors while deciding. Look at their track record, the technology they use, compliance focus, expertise, integration options, and reporting capabilities, and then finalise your decision.