Business Journal

Posts Tagged ‘Payroll’

It makes sense to outsource your payroll processing services if you value your employees but are still looking to save resources, costs and manpower. Human Resource outsourcing is being increasingly sought after by companies, be they large Fortune 500 concerns or small organizations. Focusing on your core processes is always the right way ahead, as it helps cut costs and attain greater sustainability and thereby profitability. Payroll processing is one of the solutions offered by a PEO (Professional Employer Organization) as part of its HR outsourcing solutions.

When you outsource your payroll processing services to a PEO, you can not only ensure that your employees are paid properly but also that all associated chores including the extensive accounting, tax calculation and legal parameters are taken care of. The PEO also suggests the right solutions for companies to adopt and works in a successful partnership with the client company.

The payroll services offered by a company generally include administration of paychecks and stubs, direct deposit to multiple bank accounts, payroll delivery, payroll checks drawn on the PEO’s account, section 125 pre-tax administration, payroll deductions, garnishments and levies, flexible spending accounts, federal and state payroll tax deposits and returns, FICA, FIT and SIT tax withholdings, customized reports including job cost accounting reports and cost allocation reports, filing of FICA, FUTA and SUTA quarterly reports, new hire reporting, federal payroll summaries, W-2 production and delivery, wage/hour law compliance, paid leave program management, comprehensive payroll deductions, vacation and sick time accruals, department summary, and multiple worksites.

Outsource your payroll processing services and experience the right way of running your business – by dedicating your attention and resources to your core tasks and leaving human resource management to a PEO.

Next time you get your paycheck you should seriously consider taking your Payroll Administrator out to lunch. Payroll Administration is an extraordinarily complex job.

Here is a sampling of the tasks a Payroll Administrator must perform to do her job. In any given pay period, your Payroll Administrator must process and issue employee paychecks plus calculate statements of earnings and deductions. She has to keep accurate track of employee time, production, and payroll data from time sheets and other records. She also has to provide information to employees and managers on payroll matters, tax issues, benefit plans, and collective agreement provisions.

If that weren’t enough your Payroll Administrator must keep up with new legislations. This is especially true in light of the current economic situation. For instance, the new American Recovery and Reinvestment Act of 2009, effects how much employees need to contribute to their the COBRA medical premiums should they be laid off involuntarily and how much credit the employer can claim to offset the balance. If all this sounds like a lot of gobbledygook to you think of how your poor Payroll Administrator must feel! (if you are interested in this particular issue you can check it out on IRS.gov)

A viable alternative to this administrative morass is through payroll outsourcing by hiring a Professional Employer Organization, PEO.  A PEO is an administering company that becomes the employer of record for the client company. The employees in this instance are leased back to the client firm. This approach not only offers administrative relief for a company executive, it can also minimize liability stemming from Human Resources issues such as Payroll Administration.

Another option is the Administrative Services Organization (ASO) solution. An ASO is capable of doing all the Human Resources activities that a PEO can do but it does not require the administrative company be the employer of record for the employees. The added bonus is that the client company can pick and choose ala carte Human Resources tasks to outsource such as Payroll or Benefits Administration.

Now that you’re clued in on the intricacies of a Payroll Administrator’s job don’t you think she deserves to be taken out for lunch!

Payroll outsourcing allows the usage of latest technology. Outsourcing payroll allows an organization access to the best solutions and latest technology without the need for software upgrades or a direct investment. Payroll outsourcing gives companies a competitive edge. If a company offers HR or payroll outsourcing service then it will give the organization freedom from all the payroll functions. These companies will initially study the present salary structure, number of staff in the organization, company policies, rules and regulations, tax laws etc in depth study before providing the service. Once they come to know everything about the company’s payroll structure they can take care of salary, superannuation, deductions and reimbursements etc.

Outsourcing benefits various organizations, from small firm with less than five employees to large organizations with more than 100,000 employees. If companies outsource payroll and HR activities then it can focus on core activities. Many medium to large organizations have realized the benefits of outsourcing activities.

If an organization outsourcers certain activities like HR and Payroll then it can focus on core competencies like customer service, product development, innovation and strategic direction. Some smaller firms tend to invest more in non core competencies like HR and payroll and neglect investment in core competency areas. You can reduce on operating costs if you outsource certain non core activities.

When an organization hires an employee he will incur certain costs of hiring and then training him and then the ongoing salaries of payroll personnel. After that you will require software for payroll service which has to be upgraded every year. There will be lot of time and money wastage.  So it is better to outsource payroll services. Many payroll outsourcing companies apart from increased functionality offer other services like handling employee retirement plans and direct deposit. They also provide management reports, calculate employee tax obligations.

Outsourcing payroll Provider does accurate job for their clients so that they can sustain in the HR outsourcing business. Payroll personnel calculate federal, state and local employment taxes for the employers. If tax evaluation is done incorrectly employers business have to face penalties for the mistake he has made. If you outsource your payroll service you do not have to face any of these problems. Outsourcing payroll services reduce the risk associated with exposing confidential payroll and HR information to unauthorized access. Employers do not have to worry as the latest technical know how’s of the business is handled by payroll outsourcing providers. As all the payroll services are outsourced an employer has access to a greater number of services. Certain administration non core functions like insurance, retirement plans and direct deposits become part of the payroll process.