The COVID-19 pandemic hit businesses hard all over the world. It stressed the importance of increasing efficiency, staying innovative, and reducing costs. With high competition in almost every field, businesses have to take every step possible for survival.
When brainstorming how to achieve all this, businesses tend to look at ways to improve the core business functions and product offerings. However, there is a simple way to increase efficiency and save operational costs that often gets overlooked, and it is payroll outsourcing.
Any company that has employees has to deal with payroll processing. While the number of employees may vary from company to company, the one thing that remains the same is that payroll processing is a complex task that requires time and effort.
With the pandemic impacting the revenues of most businesses, it only makes sense that they direct all their energy towards increasing their revenue stream and coming up with ways to retain and gain customers.
Many companies are realizing the benefits of payroll outsourcing during the pandemic and are choosing to outsource it. Wondering what is causing the shift? Read on to find out more.
What to Expect From Payroll Outsourcing?
Before moving on to the benefits of payroll outsourcing during the pandemic, it is pertinent to understand what services payroll outsourcing offers. When you outsource the payroll processing, the third-party organization handles everything related to paying the employees.
This includes running the payroll and getting it analyzed and evaluated by qualified payroll experts. It also involves calculating all the central and state government taxes and withholding the correct amount each month. The taxes should also be deposited to the Income Tax department in a timely manner.
Businesses should also ensure that they are withholding the proper pension contributions and depositing the same towards the pension fund along with the employer contribution.
There are various reports associated with payroll that the business may have to submit to the government to ensure compliance with the tax laws. Generating these reports is also a part of the payroll processing.
Top 8 Reasons to Outsource Payroll Processing During COVID
Outsourcing is a huge decision that requires careful consideration. As with any other decision, businesses have to weigh the pros and cons to make an informed decision about payroll outsourcing. Here are the top eight reasons to consider payroll outsourcing.
Save Time and Effort
Payroll processing is a time-consuming endeavor. Even if the business is small and has fewer than ten employees, calculating their salaries, taxes, hours worked, checking compliance, and generating reports is a tedious process. Payroll processing requires careful attention to detail and is not something that you can speed through.
Payroll processing is not a part of the core business functions. It does very little towards improving the products or services offered by the business. At the same time, it is crucial for employee satisfaction and cannot be overlooked or taken lightly. All of this puts businesses in a tight spot.
In addition to this, almost 63% of small business owners underestimate the time it takes for payroll processing. The average time taken for payroll processing in a year is 21 business days. That is close to a month. A month’s worth of work goes towards something that has very little bearing on improving your business.
Wouldn’t it be better if you were able to devote this time to your core business processes? That is exactly what outsourcing lets you do. Payroll outsourcing takes care of this important yet tedious process so that you can concentrate on making and implementing plans to improve your business. It lets you divert the time and effort you would otherwise spend on payroll processing towards more fruitful business endeavors.
Reduce Operating Costs
There are a number of costs associated with processing your payroll in-house. For example, you would need to hire employees who can perform payroll processing. Further, the number of employees for the payroll department will depend on the number of employees in the organization as a whole.
Now, these employees also need office space and various utilities. It is difficult and inefficient to manage payroll manually, and you will need to use payroll processing software. This software also has a licensing fee that you have to pay to make use of.
The employees who process the payroll will need the training to use the software and understand the company policies. There is also the extra cost associated with hiring new employees. Employees will also need sick leaves, benefits, health insurance, etc. All these costs may be insignificant on their own, but they add up to a large amount in no time.
With the pandemic hitting the revenues of all businesses, wouldn’t you love to save some money wherever possible? A reduction in operating costs is one of the foremost benefits of payroll outsourcing during the pandemic.
Businesses can utilize the extra savings to ensure that the business stays profitable and can cover its liabilities.
Ensure Compliance and Avoid Fines
Compliance with the tax laws is a serious issue. You have to ensure that your payroll management complies with all the rules and regulations set forth by the government. There is also the added burden of keeping track of the changes in these rules and regulations and ensuring that your payroll processing abides by the latest laws.
Since the onset of the COVID pandemic, governments worldwide have made a lot of changes to the existing laws. Most of the time, these changes are not a one-time affair, and multiple small changes are rolled out from time to time.
On the one hand, you have constantly changing regulations, and on the other, you have to keep up with the changes to avoid fines or audits.
You could be an expert in your business domain and might know everything there is to know about the products you are offering, but the same cannot be said about payroll processing. When you choose to do payroll processing in-house, there is a higher risk that you might fail to abide by some regulations, thereby resulting in fines.
Companies that offer payroll outsourcing hire experts in payroll laws who are always up-to-date about the latest regulations. Since this is their area of expertise, they will not make mistakes. Payroll outsourcing firms also have multiple checks in place to ensure that they are always compliant.
Improved Data Security
Data security is a major concern in today’s world. Since the onset of the pandemic, many businesses have faced data breaches. Several have shifted at least a portion of their workforce to remote work due to the pandemic. This opens up sensitive company data to cyber threats, especially if the business hasn’t taken enough security measures.
Cyberattacks are often directed towards stealing sensitive information such as the bank account details of the employees, as hackers can then use this information for other nefarious activities. All of this means that the payroll information of employees and customers’ personal information is quite often the target of cyberattacks.
Putting up advanced firewalls is a costly affair. Third-party payroll processing companies already have these firewalls in place since we deal with sensitive financial information as a part of the core business function on a day-to-day basis.
Data security is one of the foremost concerns for firms that handle payroll processing. We have multiple backup servers and firewalls to ensure that all our client’s data are in safe hands.
All business owners understand that reports are lifesavers in many situations. Reports can break down all the data and present it in a form that is easy to understand. When you are running a business, you have to make quick decisions, and you need insightful reports to make these quick decisions.
Is payroll merely about paying employees’ salaries? What possible insights could you derive from it? Well, as it turns out, there is quite a lot you can learn from payroll about your employees.
If you have reports that match the employees’ performance to their payroll, you can identify those employees who deserve a pay hike. Appreciating hard-working employees motivates them and others to work harder, and it makes them feel seen.
Reports on payroll can also help you identify the potential outliers. Are you paying someone more than the market rate? If so, are they worth it?
Many reports provided by payroll outsourcing firms can also help you understand the cost of overtime and if you are facing a staff shortage. If you are paying a significant amount towards overtime, then it might be wise to weigh hiring additional employees against the cost of overtime.
Data and data-driven insights are changing the world. Your payroll processing is a treasure trove of data that can offer a bucket of insights that will help you improve your business.
Enhance Employee Satisfaction
While customers are important for every business, employees are equally important. Employees are the backbone of the business. Happy employees put in sincere work that will help increase your business’ revenue.
The pay the employees receive plays a huge part in job satisfaction. Employees who receive their pay on time without any errors will naturally be happier and more satisfied with their jobs.
The pandemic has affected the incomes in many households, and many double-income households have become single-income households. In such trying times, employees are looking forward to salary to pay their bills.
When you decide to use a payroll outsourcing company like ours to process all your payroll, we ensure that payroll and other salary compliances are on time. We also ensure that all the overtime pay is paid on time. Additionally, we also ensure that all your employees receive their bonuses on time.
Scale With Ease
Businesses are constantly changing in size. As your business increases in size, your payroll needs to change too. If you are doing your payroll processing in-house, then this means that you will have to interview and hire new employees to meet the growing demand. If for some reason, your business needs to reduce its size, you might have to let go of a few of the staff in the payroll department too.
In short, the whole process is exhausting. However, if you use payroll outsourcing services, you can increase or decrease the size of your payroll team whenever you wish without any additional effort.
Avoid Payroll Errors
Errors in calculating the payroll can be costly for both the employer and the employee. If there are mistakes in the tax calculations, you will have to adjust it in the final paycheck of the year, leading to a substantially lower paycheck in that month. Miscalculating the overtime pay or the bonuses or benefits can make employees resent you, especially if it happens quite often.
Further, any mistake in calculating the payroll that leads to non-compliance with the tax regulations can attract fines for the business, which then eat into your profits. When profits are already dwindling at times such as the pandemic, no business wants anything else to encroach into theirs.
One of the benefits of payroll outsourcing during the pandemic is that the payroll outsourcing firms have various checks in place to catch any errors and not let them impact your business or your bottom line.
While many companies realize the benefits of payroll outsourcing during the pandemic, the cost of outsourcing and the quality of work is often a concern. You can mitigate these risks by choosing 247HRM for your payroll outsourcing needs. We provide highly efficient and accurate payroll processing at affordable rates.
Our end-to-end solutions and customizable options help you choose the best for your business. With expert knowledge on payroll processing and an award-winning Employee Self-Service Solution, the services offered by 247HRM are unmatched by anything else in the market