Payroll outsourcing is one method for paying employees using a third-party payroll provider in a domestic or international venue. To outline the pros and cons and the key reasons for outsourcing the payroll to workers on assignment, we have put this fast guide to payroll outsourcing.

What is Payroll Outsourcing?

Payroll outsourcing is essentially using a service provider to manage to pay workers’ administrative and enforcement functions. It is necessary to remember that payroll services are just that, and do not provide a multinational corporation with a local record employer. This implies that local incorporation is still necessary, and DIY or other professionals must manage the different aspects of hiring employees.

When is Payroll Outsourced?

Whether to outsource payroll depends on various factors, such as the number of workers on assignment, whether a business has a local agency and the complexity of jobs and withholding regulations in the host country. The time and cost of setting up and managing a local payroll can not be justified in certain situations, so the payroll features are outsourced to another organization in the host country.

Although many small companies regularly use payroll outsourcing in Singapore, when sending employees on foreign assignments to a new market, larger businesses may profit from this service.

In that case, a business can choose to use either a local payroll provider or a GEO service that provides its customers with comprehensive job support, including a compliant payroll for all employees in that region.

A business can customize the payroll services they outsource,

depending on their needs while maintaining control of other aspects.

Usually outsourced to a third-party supplier, the payroll roles include:

  • Running payroll and making estimates for employee pay and withholding
  • Direct depositing of funds or issuing checks to employees
  • Calculating state and federal payroll taxes and making contributions with tax withholding
  • Needed Government Reports Filing
  • Administering opportunities for workers
  • Withholding payments to social security and insurance

Advantages of Outsourcing Payroll

For both small and large businesses, outsourcing payroll benefits are various, and a large percentage of companies use this form of service abroad. The advantages of cost and time savings, monitoring and avoiding enforcement problems make outsourcing a common service, such as outsourced accounting services. In international markets, where payroll rules and tax laws are unfamiliar to a new company, these advantages are compounded, and a local payroll provider can be a valuable partner.

Disadvantages of Outsourcing Payroll

Payroll outsourcing is a restricted, administrative international jobs option and does not guarantee compliance in the host country with taxes, immigration or labour laws. The payroll provider does not provide a local employment entity to a foreign company, so incorporation and registration and other enforcement measures are still required.

Other functional drawbacks include loss of control of wages and employee records, security problems and lack of quality of service or timely reporting. These can be offset by detailed analysis of the country’s payroll providers and choosing the best available business.