Outsourcing payroll is an easy way to save time and money; instead of tracking and calculating employee pay by hand or using spreadsheets, you can hire a company that uses software to run your payroll for you.

A payroll outsourcing company will process your payroll by gathering your employees’ information (hire date, job title, and pay rate etc), obtaining any time card data, calculating the pay that’s due to each employee, and then paying that amount by issuing a direct deposit to each employee or providing you with the amounts for you to make payment.

These are some of the steps that payroll outsourcing services generally follow when processing your payroll.

• Set up their payroll software with your company and employee data, including your payroll bank account and employees’ bank accounts for direct deposit.
• Collect new employee information as well as information of employees who have left.
• Obtain time data (clock-in and clock-out times or hours worked as well as overtime and no pay) for each pay period to input into their payroll software.
• Confirm hours worked each pay period as paid or unpaid, and calculate gross pay.
• Run your payroll, processing statutory deductions (Income Tax EPF ETF etc.) as well as post-tax deductions like loan repayments and sports club subscriptions etc.
• Make deposits to employees’ accounts or forward details to the bank to make the payments and  deliver pay slips and advices to your office.
• Provide reports to your business
• Provide statutory reports to the different Government Organisations.

Outsourcing makes sense for businesses that don’t have someone on staff with the time or experience to do payroll. In small businesses, one person typically performs both bookkeeping and payroll functions. A small business can save costs by outsourcing payroll rather than having a full-time employee to do this work.

Even if you have HR personnel on staff, it may be better to outsource the payroll aspects of the job to someone familiar with labour and tax laws. It also helps keep the payroll confidential within your employees as the work is carried out off-site.

For business owners anywhere, the key to succeeding early and often is to focus your time, resources, and experience on the revenue-generating functions of your business—and limit risk and expenses. Outsourcing non-core or non-revenue-generating administrative and compliance functions such as payroll gives business owners time back and allows them to focus on the long-term growth of their business.

Ask yourself a few questions;

1. What are my employer responsibilities? Both to my Employees and the various statutory bodies.

2. What happens when I have to run an off-cycle payroll, such as to pay year-end bonuses or to correct an over- or under-payment? How do I calculate Taxes etc.

3. Can I manage benefits and deductions?

Let these be someone else’s head-ache – the company you outsourced your payroll to – They already know the answers.