Payroll is not a simple process involving the payment of salaries to employees on time. As soon as you employ people your business falls under the purview of various Acts in India. For instance, if the number of employees crosses 10 then EPF becomes applicable. If the wage amount crosses a threshold then the Employees State Incorporation rules come into play. These and other applicable rules mean that payroll needs careful processing not only to take care of precise calculation but also other factors such as deductions. It is far better to hand over the entire part of your business operation to payroll outsourcing services in India.
If a business employs 10 or less then payroll may be fast and easy. However, even then one has to spare time to calculate attendance, perks and other things besides deductions for leave or statutory deductions. It means you have to employ someone to take care of such calculation and the HR person also needs to be fully aware of tax implications as well as statutory compliances. Even if a business opts for payroll software it does entail the expense of the software, associated IT infrastructure, personnel and space. It is better to opt for payroll solutions for small business from third-party service providers. Professionals do it better and there are quite a few advantages to outsourcing payroll to experts.
It may take a few days for your in-house personnel to calculate salaries and prepare pay slips. Let payroll outsourcing services in India handle it and you have the payroll and pay slips ready by the 1st or 2nd of the following month.
Errors of omission or commission in salary calculations can have adverse impacts. This may lead to employee dissatisfaction. Inaccuracy in deduction may lead to notices issued by various departments and the subsequent possibility of fines and penalties. Speed and accuracy in payroll preparation also ensure that all statutory compliance forms are ready for submission before the final date for such submissions. EPF has to be deducted and such deductions deposited with the government, for instance. Income tax must be deducted and deposited along with forms on appropriate dates. Delays and inaccuracy in calculation could be avoided by hiring expert outsourced payroll services. They have been doing it for years and know exactly what needs to be done and when.
Perhaps one of the biggest advantages of outsourcing payroll is assured continuity. You may hire people to take care of HR processes and payroll. They may leave and it takes time for the new recruit to settle in. Outsource payroll and you never face this kind of situation.
You may employ part-time workers, contract labour, full-time employees and must maintain accurate records with precise calculation as well as deductions and compliances. Outsource payroll and you never have to worry.
Payroll outsourcing services in India handle it with better-automated software and also put in place a portal that employees can use for functions such as viewing and printing salary slips, putting in leave requests, raising a complaint or any matter. Employee self-service leads to better satisfaction and this results in improved productivity.
This could be a great headache because there are over 22 various Acts governing employees in different categories. Apart from Income Tax, there are Acts such as The Employees Provident Funds and Miscellaneous Provision Act, ESIC Act, Professional Tax Act, Labour Welfare Fund Act, Contract Labour Act, Minimum wages Act, Payment of Bonus Act and others. As a businessman, you may not even know about the Acts and which ones apply to your business. Outsourced payroll services also handle compliances and can advise businesses as to which Act applies to their operations and the best way to stay compliant. If you do hire in-house HR staff it is more than likely that they may not possess adequate knowledge of all such Acts and the latest amendments. It is a complex maze and payroll outsourcing service providers usually have legal experts on their staff to handle this. Errors by in-house staff could lead to penalties and notices. There is no such issue when you outsource payroll. The savings on penalties alone justifies the cost of outsourcing.
All round savings
How can you save when you have to pay the payroll outsourced service providers? This is how:
- You do not have to maintain a team of HR personnel and pay high salaries to them while not being assured of the same level of services that payroll outsourcing services provide.
- You save on valuable office space that HR personnel occupy and the utility bills. The space could be used for more productive work.
- Timely compliance means no penalties or fines.
Data and analytics
One of the greatest advantages of outsourcing payroll is the insightful analytics and intelligence you derive from an in-depth analysis of payroll operations. Further, payroll service providers also delve into employee performance and deliver reports that help management make informed decisions leading to all-around improvements. You certainly cannot expect in-house personnel to provide this type or this level of analytics.
How much can you trust your HR personnel to maintain confidentiality and security of employee records? There always is a question mark whether it is paper-based records or digital data. On the other hand, payroll service providers provide total security and assure full confidentiality. They have a reputation to maintain and operate with strict ethics. You have peace of mind.
There is a generalized misconception that payroll outsourcing is only for medium and larger businesses with more than 50 employees. This is not true. Even if you are a startup and have just 10 employees or less, it pays to put in place standardized practices, especially for payroll if you wish to keep employees happy and relieve yourself of the burden. You are putting in place a professional, modern system that will help you in future as your business grows. Cost becomes insignificant when you consider all the advantages payroll outsourcing brings in its wake.