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Payroll Outsourcing
Payroll

Payroll Outsourcing: How to outsource your small business payroll

It’s no secret that payroll management can be a struggle for small businesses. If you are frequently experiencing payroll errors, tax penalties, high costs or if it’s taking up too much of your time – it might be time to consider outsourcing your payroll process.

But what does outsourcing payroll mean? And what would it mean for your small business? We’re here to walk you through it. Finding a high-quality outsourcing solution can make payroll management simpler and decrease the chance of mistakes.

Here’s what we’ll cover:

We’ll start by explaining what payroll outsourcing is.

What is payroll outsourcing?

Payroll outsourcing is the use of an external provider to handle the administration of your company’s payroll. Rather than an in-house payroll or HR professional, team manager, or small business owner handling payroll themselves, a third-party company takes care of the logistics. Companies choose to outsource payroll to save time, money, and to prevent payroll errors that could have serious consequences.

Payroll outsourcing also allows access to convenient and secure cloud-based payroll solutions. QuickBooks Payroll powered by Employment Hero is a comprehensive accounting software option to save you time and keep you compliant with government regulations. You can use the app or desktop version to manage everything from direct deposits to tax withholdings. But when should you consider outsourcing payroll? Let’s take a look.

When should you consider outsourcing payroll?

Outsourcing any part of your business can feel nerve-wracking. After all, it’s your business – you want to be in the driver’s seat. But for many small businesses, worrying about details like payroll can actually keep you from commanding that leadership role.

There are a few signs it may be time to think about outsourcing your payroll solution. If your current payroll system causes frequent mistakes, this could become a liability. This can lead to high costs, wasted time, and lost productivity. You may also have a hard time complying with the Australian Tax Office (ATO) or fair work laws, and employees may experience frustration due to long wait times for paychecks.

Additionally, some companies are subject to tax penalties due to mismanaged payroll administration. These can be costly by themselves, and they end up costing even more when you factor in lost time spent dealing with an audit or penalty.

What do payroll outsourcing services do?

Payroll outsourced services streamline your payroll processing system. Often they automate many aspects of payroll. This includes calculating tax withholdings and deductions, depositing employee payslips for each timesheet, compiling payroll reports, and producing payroll registers.

A high-quality payroll outsourcing service will provide you with a full suite of features for running payroll efficiently. Simple outsourcing options allow you to manage payroll data from a phone or desktop application, while higher-value options allow you to connect directly with professional support. They may also include HR outsourcing features.

Rather than having an in-house team deposit paychecks, calculate tax withholdings, and prepare quarterly tax filings, outsourced payroll handles it all behind the scenes. Plus, professional payroll services significantly reduce the chance of errors in your payroll processing.

Why should you outsource payroll?

According to a report by the Australian Payroll Association, 24.7% of all Australian businesses and 37.8% of Australian SMEs with less than 200 employees outsource payroll. Not sure if your small business is ready? Let’s review a few of the benefits you can expect.

  • Cost savings: Hiring someone to work on payroll in-house can be expensive. And if you’re spending your own time working on payroll instead of focusing on other aspects of your business, you could be losing money. Outsourcing payroll experts can be a much more affordable option.
  • Time savings: Time spent worrying about payroll tax documentation, payroll processing, and more is time you’re not spending elsewhere. As a leader in your business, it’s important to devote your time to the things that matter most. Outsourced payroll allows for that.
  • Accuracy: Payroll errors can lead to plenty of headaches. Employees may become frustrated and leave your company if they are paid incorrectly or too late. Outsourcing payroll helps reduce the chance of errors, especially for companies with a large number of employees.
  • Tax penalty protection: Errors can also lead to tax penalties. By having a professional payroll service handle tax compliance, you’ll avoid that headache—it’s an investment in peace of mind.
  • HR services: Some payroll processing platforms also include a suite of HR features, such as time off and insurance management. These can also help decrease costs to your business while streamlining your employee management.
  • Direct deposit: Employees like being paid on time. Outsourced payroll allows you to set up automatic direct deposit so no one’s ever wondering when their pay will come in.
  • Onboarding new hires: Outsourcing payroll will quickly get new hires on the payroll and ready for their first day on the job before the next pay period.

Now that you know the benefits, you might be wondering: How do I outsource my payroll system?

Grow Your Business with QuickBooks

How To Outsource Payroll

Outsourcing payroll is easier than it sounds. Plus, a little effort now will save you tons of hassle down the road. Here are the steps you can take to make sure the transition is seamless.

Choose your budget

As with all things in the business world, it’s a good idea to have a budget before committing. The great news is that full-service payroll outsourcing doesn’t have to be expensive. You can partner with an advisor who can manage your basic payroll, and the chances are it’s a fraction of the cost of the time you might spend on payroll if you’re doing it yourself. A starting point is getting the right payroll software and then finding an advisor who can work with you.

For more advanced services, pricing can be a little higher per month—but the long-term savings in time, effort, and accuracy quickly make outsourced payroll cost-effective.

Determine what type of service you want to use

What parts of your payroll would be most helpful to outsource? Is there any aspect of payroll, tax, and employee benefits management that you know you want to keep in-house? Be sure to answer these questions as you look for the right payroll service provider for your organisation.

Remember, some services might just handle basic payroll functions. But others can also help with a whole suite of human resources tasks, like benefits management, time off, and more. Keep these needs in mind as you seek out the right payroll service.

Do your research

This step goes hand-in-hand with the previous one. It’s impossible to know which payroll processing software is right for your company without doing solid research beforehand. Your research should involve asking questions like the ones listed above, and then looking at what each platform offers.

pSome platforms, like QuickBooks, allow you to select from a variety of payroll processing plans. This gives you more flexibility when choosing different levels of service for your organisation. It’s critical that you research each plan’s features and price point. That way, you know you’re only paying for services you need.

Choose the right payroll service

Once you’ve set a budget, determined what you need, and researched your options, it’s time to choose a payroll software service provider. When choosing a provider, you want to find one that is quickly and easily integrated with your current payroll process. It’s also important that employees feel secure and confident in their new payroll system.

Choosing a service like QuickBooks can be a great way to accomplish those goals. QuickBooks is simple and intuitive, and it can easily integrate with your current operations. Plus, our fast direct deposit system will help ensure your employees are happy with the change.

What To Remember When Choosing a Payroll Provider

There’s a lot to cover when it comes to outsourcing payroll. Here’s what you should remember as you start thinking about your payroll solution:

  • Payroll outsourcing is the use of an external payroll company or software to manage tasks like the employee pay run, tax and ATO compliance, benefits, and more.
  • It’s usually a good idea to consider outsourcing your payroll if you find that payroll management is time-consuming, costly, causes frequent mistakes, or creates a lag before employees get paid. This is important for both small and large businesses.
  • Payroll outsourcing services streamline your payroll processing. Rather than spending time, money, and energy on processing your payroll in-house, you can put that energy toward creatively running your business.
  • Outsourcing payroll offers a number of benefits:
  • Cost and time savings
  • Accuracy and compliance with ATO regulations
  • Broader HR services

Save Time with QuickBooks Payroll

QuickBooks Payroll can help you save time by automating many of the tasks associated with payroll management. With QuickBooks Payroll, you can:

  • Calculate tax withholdings and deductions
  • Compile payroll reports
  • Set up automatic direct deposit
  • Onboard new hires

By using QuickBooks Payroll, you can spend less time on payroll and more time on growing your business.

Frequently Asked Questions

This content is for information purposes only and should not be considered legal, accounting or tax advice, or a substitute for obtaining such advice specific to your business. Additional information and exceptions may apply. Applicable laws may vary by state or locality. No assurance is given that the information is comprehensive in its coverage or that it is suitable in dealing with a customer’s particular situation. Neither Intuit Australia Pty Ltd nor any member of the Intuit Group (referred to collectively as Intuit) will have any responsibility for updating or revising any information presented herein. Accordingly, the information provided should not be relied upon as a substitute for independent research. Intuit does not warrant that the information provided will continue to be accurate nor that it is completely free of errors when published. Readers should verify statements before relying on them.

Intuit provides third-party links as a convenience and for informational purposes only. Intuit does not endorse or approve these products and services, or the opinions of these corporations or organisations or individuals. Intuit accepts no responsibility for the accuracy, legality, or content on these sites.


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