“Master your strengths, outsource your weaknesses,” Ryan Khan once advised. Outsourcing is, perhaps, the smartest way that companies and businesses, i.e., irrespective of size, do to delegate complicated and time-consuming tasks. With this strategy, the focus is shifted from non-core administrative tasks to core business areas, such as product or service development. One such demanding and elaborate process that qualifies to be outsourced is payroll management.
In another article, we have established the advantages of payroll outsourcing over purchasing in-house payroll software. With more and more companies integrating technologies in their operations, it cannot be denied that using payroll software comes with benefits; however, there are also various disadvantages and limitations, e.g., security risks, potential extra costs, compliance errors, payroll staff needs, and a lack of human touch, among others. These provide justifications for rather outsourcing payroll.
Now, in this follow-up article, we’ll discuss the most important factors to consider when choosing an outsourced payroll service provider. With a number of payroll providers and partners available and advertising their services online and offline, it can really be overwhelming to identify which may address the specific needs of your business. So, read on and share your thoughts in the comments.
Payroll Service Provider
Outsourced payroll service providers are third-party firms that either assist with or assume all aspects of another company’s payroll. They handle aspects such as the calculation of employees’ wages and salaries based on received timesheets, deduction of taxes and statutory contributions, generation of payslips and other reports, and even document filings and remittances with government agencies.
12 Factors to Consider When Choosing a Payroll Service Provider
Once you have developed a full understanding of your company’s payroll needs and decided to outsource them, start looking for a reliable service provider and consider the following factors:
Understanding Specific Business Needs
Does the provider understand the specific needs of my business? Payroll is not a one-size-fits-all service, the reason why payroll software alone may still need a lot of adjustments to suit specific business needs. Thus, a good payroll service provider understands these needs and offers viable options right at the initial consultation.
Easy Shift and Onboarding
How easy will it be to make a switch? Outsourcing payroll is easier for a startup company with a few newly hired employees than an existing one making a switch from an in-house payroll. Despite this, the provider should have the mechanisms to get the company onboard without major disruption to business operations.
Client Support
Will there be a payroll specialist available to answer questions at my convenience? Payroll expertise is one thing, and responsiveness to the clients’ queries and requests is another. All payroll service providers are expected to calculate employees’ salaries and deductions and generate the necessary documents for filing. Their availability and ability to respond immediately to questions and resolve issues 24/7, or at least during office hours, however, make all the difference.
Modern Solutions and Personalized Approach
Does the provider have modern payroll solutions? How personalized is their approach to payroll? An ideal outsourced payroll service provider combines modern solutions with a hands-on approach. Without a doubt, automated payroll streamlines payroll tasks, reduces errors, and ensures timely crediting of wages and salaries and delivery of reports. Equally, most providers utilize cloud-based technology to allow direct client access to payroll documents anywhere and anytime.
Service Packages and Inclusions
What are the payroll service packages and their inclusions? Normally, service packages offered by providers include calculation of gross salary, tax deductions, and statutory contributions for each employee, generation of payroll reports and payslips, submission of final payroll reports to concerned government agencies, computation of final pay for resigning employees, annualization of taxes on compensation, and filing with the BIR. Apart from these, other value-added services, such as the processing of employee benefit claims, loans, alphalists, and substituted filing reports, may also be available.
Requirements and Responsibilities
What are the basic responsibilities of each party? While the purpose of outsourcing payroll is to transfer the burden of payroll tasks to the provider and maximize the time for core business activities, it is crucial to clarify in advance the responsibilities of each party. For instance, the company must furnish the provider with employees’ daily time records (DTRs) five days before each payroll date or must be the one to distribute the payslips to individual employees.
Value for Money
How much are the service fees? Will I get real value for my money? Another important consideration when choosing a payroll service provider is the fees. Of course, pricing is not everything, but it must be aligned with the company’s budget. When deciding on this matter, it is imperative to look into the “best value for the money.” Equally, choose a provider that offers transparent pricing plans, that is without hidden fees or unnecessary add-on services.
Reputation
How reliable and experienced is the payroll service provider? These days, it’s very easy to come up with a shortlist of outsourced payroll service providers. Simply search online, ask for referrals from friends, fellow business owners, or even strangers on social media, or read through forums. Most likely, the list will be narrowed down to the providers with the most recommendations because of their proven track record, or perhaps, years of top-notch provision of payroll services.
Data Security
What measures does the provider take to ensure that the company information is safe and secure? Payroll documents contain both the company’s and employees’ sensitive information. Thus, it is important to know how the provider keeps their clients’ information safe and secure. With the implementation of the Data Privacy Act, the provider is also expected to lay the terms and conditions governing the privacy of the company’s payroll data in the service contract.
Scalability
Can the provider easily adapt to business changes? Depending on your business’ goals, you may find that you have simpler payroll needs in the present but will require added support upon growth and expansion. Future changes, such as having employees from across the country or offshore, or offering special employee benefits and perks, that will be part of scaling up the company and its operations must also be anticipated and addressed by the provider.
About FilePino’s Outsourced Payroll Services
FilePino, Inc is a one-stop-shop business consulting firm and part of a group of companies and brands (i.e., a law firm, virtual office provider, global employer of record/PEO service provider, and documentation service provider) that provides professional company formation, business registration, and post-formation services.
Composed of professionals and experts, such as corporate lawyers, accountants, and payroll specialists, FilePino’s HR and Payroll Department offers payroll service packages that normally include:
- Computation of the company’s payroll based on the company’s normal payroll schedule, on the client-provided timekeeping documents, and on the existing labor laws, rules, and regulations
- Generation of customized payslips for individual employees
- Computation of government-mandated contributions and deductions (i.e, withholding taxes, and SSS, PhilHealth, and Pag-IBIG Fund contributions)
- Monitoring of employees’ loans, advances, and other payroll-related statutory deductions
- Computation of regular and pro-rata 13th month pay
- Computation of the final pay of the resigned employees
- Provision of Monthly BIR 1601C details (classification of taxable and non-taxable salaries, statutory contributions, and tax payables)
- Accomplishment, generation, and/or filing of SSS, PhilHealth, and Pag-IBIG Fund reports (e.g., SSS R-1A for new employees, PHIC RF-1 Remittance Report, HDMF MCRF Contribution Remittance, etc.)
- Annualization Report per employee (service package-based), and
- Other value-added services (e.g., encoding of Alphalist Schedule, generation of BIR 2316, BIR Substituted Filing Report, etc.) (service package-based)
… and you might just need our assistance.
When choosing the right outsourced payroll service provider, consider its understanding of your unique business needs, ease of onboarding, responsive client support, modern solutions with a personalized approach, and other factors. Set up a consultation with FilePino today! Call us at (02) 8478-5826 (landline) and 0917 892 2337 (mobile) or send an email to info@filepino.com.
