Even so, payroll outsourcing does not come without its drawbacks and issues. There are many things to consider, not least of which is whether a vendor can provide a decent service for your company. Outsourcing companies vary in the way they work, the prices they charge and the features they offer.
Companies can operate at varying levels including:
- Fully outsourced services: in which the provider handles all your payroll requirements.
- Self service payroll: software which helps you manage payroll in-house.
- Managed payroll: a more stand back service in which they are there to provide advice and support when needed to help your in-house efforts.
Costs will also depend on the size of your business and the complexity of your payroll. For example, simple salaried payroll in which everyone is working the same number of hours and are paid at the same time will be easier than those including different types of employees, on different contracts, working different sets of hours.
One of the key questions hospitality businesses will be asking themselves will be how they can make payroll outsourcing work for the payslip generation — those working part time, casual and varying hours.
Equally, those businesses who use freelancers will also consider how these should be managed. They will not be part of the regular payroll as they will not be included in any employee tax calculations. However, their work still needs to be recorded and paid for.
Some companies adopt a piecemeal approach, treating freelancers as service providers and paying them as and when they deliver on assigned jobs. Others will include them in payroll ensuring their monthly bills are paid at a certain time each month. All the information about their work, and their individual tax situations, would have to be recorded in the system and managed.
The payroll industry is evolving. As more businesses in the US start using outsourced services, providers are becoming more competitive in delivering a wider range of features and services. These in turn make payroll outsourcing more appealing and encourage further adoption. Even so, some of the more complicated payroll situations will not be covered by all payroll outsourcing companies which means that before you make a buying decision, you’ll need to make sure you can cover all those bases.
Some providers may also specialize in certain industries such as hospitality, catering or retail. Each sector will have different characteristics which may need something different from the payroll department.
Other factors which may influence a decision to use a payroll outsourcing company will involve the risks of working with third parties. Processing this information will require them to handle the personal data of your employees and contractors. You will have to ensure their systems are safe and secure as you will be held responsible for any loss of data which occurs as a result.
For all these risks and problems though, payroll outsourcing remains an extremely compelling proposition — one which can help businesses reduce the burden on their internal systems, avoid the risks of fines, and make your daily working life more interesting and fulfilling. Outsourcing an important but burdensome and technical task frees you up to do what you do best: focusing on making your business bigger, stronger and better.