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The Basics of Outsourcing Payroll and Human Resources

The Basics of Outsourcing Payroll and Human Resources

A company is run by a combination of different departments, chipping in to fulfill their responsibilities. The failure of one division can send the whole enterprise spiraling out of control. Unfortunately, not every business has the budget or the human power to maintain an in-house team. In such instances, outsourcing becomes the most suitable solution. Human resources and payroll processing are two of the most outsourced tasks for small and medium businesses.

Third-party providers offer HR and payroll services for entities that cannot afford it. With someone else handling the complicated tasks of HR and payroll the senior management has the energy and time to deal with the core functions of an organization. For a business owner considering his or her outsourcing options, learning of a few fundamental is essential before hiring a third party provider.

Why Outsourcing Suits Your Business

Payroll is one of the many facets of HR, and it comes with a host of challenges. A salaried staff has a lot of responsibilities. The employer must ensure that each worker receives his or her pay in a timely manner. Then there is the handling of different types of compensation besides salary like vacation pay, retirement benefits, and other perks. Payroll processing also involves filing the right taxes. Companies must stick to established payroll procedures, which is not usually easy.

A single wrong step can cause legal trouble for your company, not to mention the monetary penalties associated with common payroll mistakes. It is why outsourcing payroll has become one of the best alternatives for most employers. Between getting the payroll software, keeping up with new regulations and paying the experts who handle these duties, payroll processing can get very expensive when using an in-house team. For a small business, the costs are too high to sustain in the long-term.

Human resources involve a lot of functions that your company may not be able to handle by itself. From staffing to training to hiring employees, the HR department can get overwhelming. The people appointed to fulfill the different roles in a company must not only be capable but willing to help achieve the bottom-line. Workers are the greatest investments in any organization, and that is why staffing is such a critical responsibility when managing an enterprise.

However, the resources and time it takes to find the right candidates for a job, recruit them, and put them through the necessary training are considerable. HR is a lot more than finding the right employees; it is about maintaining them as well. Companies have to adhere to numerous rules and laws when hiring, paying, and firing workers. A complaint from the staff about discrimination or poor pay is a HR nightmare that can cost your enterprise on various fronts. By hiring third party professionals to deal with the HR functions in your organization, you can avoid such mistakes.

Finding the right Provider

Outsourcing your payroll or HR functions means that you will be sharing the legal responsibilities with someone else. If there were compliance issues in any of the operations, both the company and the firm offering the outsourced services would be in trouble. For this reason, business owners have to be extremely cautious about the people to outsource services to.

Professional employer organizations are suitable for business owners who intend to hand over all of their HR functions completely. PEOs deal with the recruiting, hiring and employing, so all you do is lease workers from them. A PEO will handle everything regarding the staff, including managing the benefits and employee relations. Alternatively, you can hire a hybrid HR company and only let it handle the complicated payroll and HR responsibilities that your enterprise can’t.

Trust is everything when hiring a HR or payroll firm. The different functions of HR, including payroll, involve a lot of sensitive information. Some employers refuse to outsource out of security concerns. The payroll company will get access to data about your salaries, taxes, and employees personal information. Employers must be certain that a third party provider won’t risk the security of the detail they are entrusted with. Find an agency with a solid reputation that you can trace back to satisfied clients. It must also guarantee secure systems when providing the services.

The range of services that a HR or payroll company offers will also determine its suitability. If its payroll administration you want, then the payroll agency must offer everything under that category, such as taxes, checks, and managing sick/vacation time. For employee benefits management, find out if the firm deals with 401ks, medical, and life insurance. The extent of your payroll and HR outsourcing dictates the kind of services to look for when hiring a provider.

Expertise in a specific field is another criterion to consider when looking for a PEO or HR firm for your outsourcing. The vendor must know the industry standards that apply when hiring workers, paying, and managing them. A HR business in the healthcare sector should be aware of the certifications for different types of employees, the level of training necessary for particular positions, and benefits demanded by the industry, among other things.

The HR company you hire is an extension of your business, so it has to fit with the organization’s image. Some entrepreneurs just focus on vendors who can do the work without considering their effects on the objectives of the company. Factor in the core values of an enterprise when hiring a service provider for payroll and HR. What is its company culture? Does it fulfill its social responsibilities? Remember that the image of an enterprise influences the kind of talent pool it attracts. Take the time to choose a HR firm that aligns with the core foundation of your business.

Outsourcing payroll and other HR functions has become increasingly common for most business owners. Being able to pass on all the complex responsibilities that characterize some of these tasks can save you significant resources. Before hiring a HR or payroll company, managers should evaluate the services that need outsourcing. Not every payroll or HR duty may need to be left in the hands of a third party. Business owners should hire HR firms that they can contact easily when circumstances call for it.