Call Us Now +62 21 390 8271
Call Us Now +62 21 390 8271
[News] How Does Payroll Outsourcing Works?
Posted at: 12 July 2017

How Does Payroll Outsourcing Works?


Setting up or running a business can involve countless different functions, which you need to manage single handily. Therefore outsourcing is a better and cheaper option these days, for example, you can outsource small bits of your entire finance management. Here’s a quick low down on how outsourcing your payroll works

Payroll is a key part of every business – it is the financial record of the salaries, wages, bonuses, net pay, and tax deductions of a company’s employees. But how does it work actually?


Basic DIY Payroll service  
Typically the vendor provides software (cloud based), that an employee at your business will utilize to calculate and prepare paychecks. Typically this service will also include the ability to prepare and file payroll tax returns and pay payroll taxes that are due. Someone at the business is usually still responsible for data entry and maintaining the employee database. So it is not a full outsourced payroll.

Full service processing 
This may work similar to the above mentioned service but you send all information to the vendor or service provider and they handle the data entry and initiate payroll being processed. The vendor may actually initiate the checks and just draft your account for the actual cost of payroll, payroll tax and service fees in one transaction.

Employee Leasing 
This means that the outsourcing vendor is the legal employer for all your employees. You pay the service based on actual cost plus some additional fee.  This method is often beneficial for small employers who want to offer benefits such as retirement plans and group insurance, but don't have a large enough population of employees to obtain good pricing.  The employee leasing service groups together employees from multiple employers thus creating a larger group of employees that they can offer benefits to. 

It all has pros and cons, but makes sure you choose the right one for your company. Because payroll is an important element in employee’s satisfaction.