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Payroll Outsourcing Explained

Payroll outsourcing can take care of all of your payroll processing requirements leaving you with peace of mind.  Whether you call them a payroll bureau or payroll outsourcing company most will take away what is often considered an onerous task for companies.

What do they do? Well payroll outsourcing companies, or payroll bureaux, usually handle the complete payroll function from data entry, payroll processing, employee banking, producing payslips, reporting and filing IRD reports and payment to the IRD, leaving companies to get on with their core business.
There are also other reasons besides increased time a company may choose to outsource their payroll.  Keeping up with changes and understanding employment related legislation can be difficult for many employers...and more changes are due. The Minimum Wage Act will change on 1st of April and more changes to the Holidays Act are likely later this year.  Lowering overheads is another common reason to outsource payroll, when the payroll is outsourced it frees up employee time for other tasks,  employees no long need training in software,  time to fix errors , or training in legislation.  Some companies like the confidentiality of having their pays processed off site. Knowing that the IRD will have reports filed and payments made on time is another important incentive to outsource payroll. For many companies payroll is just a headache, having to deal with upset employees because their pay has been incorrectly processed is something that they want to avoid.  After all it is a thankless task.

Are all payroll outsourcing bureaux the same? No, there are some important differences. When selecting a payroll bureau some care needs to be taken regarding the extent of the work required when providing employee data for processing.  Many payroll bureaux accept the hours employees work in various forms such as email, fax , or sometimes a .csv file...they make it as easy as possible to for their clients.   However some payroll outsourcing companies require their clients to input employee data into the bureaux's own payroll software. In this case, clients need to be trained how to use the software which partially defeats the purpose of outsourcing payroll.  The input into the software may be time consuming and more than one person will need to be trained in case of absence.  In this case the extent of the work required by the company needs to be investigated.

Some payroll outsourcing services are PAYE Intermediaries and will file IRD returns, arrange payment, and take responsibility of penalties should they occur.  However not all payroll bureaux are PAYE Intermediaries and although they may file returns they do not take responsibility of late returns. It can be an important difference.

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