Category: Accounting

Payroll Outsourcing Services. Is it cost-effective?

What is Payroll processing outsourcing?

Outsourcing is an activity in which a third party does the fulfilment of service. The company that outsources these activities hires a service provider to carry out a process. Monthly payroll processing is one of the most complex and bureaucratic administrative routines that all companies perform in compliance with legal requirements. It can become a source of several problems for companies.

With each passing day, a greater number of companies that are concerned with increasing competitiveness and efficiency, hand over challenging responsibilities, such as payroll, to the professional and specialized company (third party). Payroll Processing Outsourcing is a strategy that has been increasingly adopted in the corporate world. With payroll outsourcing, the companies can get more time to dedicate themselves to their reliable business, increasing the efficiency of their operations and significantly reducing costs.

If you want to hire a professional payroll outsourcing company, request a quote that suits your budget and get the best solution for your business.

Outsourcing Payroll Management as a Business Investment

From a strategic perspective, there are many good reasons for outsourcing your payroll to a professional payroll management services company. You may want to retain some of your general accounting operations such as accounts payable and managing your receivables, however, but payroll is almost always a good function to outsource.

While it may seem that it’s normally more cost-effective to keep all of your payroll functions in-house, the truth is that many companies find the cost-savings to be substantial. In addition, there are other benefits that, while not as easily measured in dollar amounts, are just as viable and just as valuable.

HR and payroll managers and directors are increasingly overwhelmed with added responsibilities, growing regulatory obligations, and a continually changing payroll landscape. Because the requirements are so staggering, juggling the interactions between departments and the growing regulatory demands of federal, state and local agencies, can overwhelm a business.

On the other hand, by outsourcing some or all of these functions, you can safely and cost-effectively delegate these burdensome processes to a reliable vendor. This can be a strategic investment on a number of levels.

How do you reduce the costs of outsourcing payroll?

It is known that Outsourced Payroll Solutions can reduce company costs, and this is one of its main advantages. Remember, a professional payroll outsourcing company has trained professionals, software, team and skilled management, mainly devoted to doing the one work: payroll management. It is their knowledge that brings swift work.

For example, you have a small business, and you have approximately 100 workers working for you. It means you will need to hire two or three persons to maintain the employee schedules, leave, deductions, taxes, managing the timesheet, generating payroll reports, etc. What if you don’t hire anyone, but outsource the entire process? Just contact with a professional payroll outsourcing company, discuss the details, get the package in an affordable budget and you are done. You save money.

Time optimization – Another benefit of payroll outsourcing is the optimization of the time it provides. With the division of labour performed more fluidly, there is better time management. Also, complex processes that take a long time to become the responsibility of outsourced processes.

Tremendous growth – Combining the improvement in the quality of service, the optimization of time and the greater focus on the core activity, it is clear that the company that invests in outsourced services tends to grow and develop.

Cost-effective and beneficial aspects

In the competitive scenario of the modern world, outsourcing payroll service has become synonymous with more productivity and quality. Be it small, large or medium: hiring a payroll outsourcing company has been increasingly common and in vogue. The companies look for an ideal way to ease their improvements, reducing costs and increasing productivity. In this way, outsourcing payroll service guarantees greater peace of mind for the company and also for the customer.

Hiring a payroll outsourcing service is cost-effective if it comes with great support. Some of the advantages of outsourcing payroll are:

• It relieves the organizational structure.
• Provides better quality in the provision of services, contributing to product improvement.
• It brings more specialization in the provision of services.
• It provides more business efficiency.
• Provides more decision and organizational agility, and also simplifies the organization.
• Decreases labour risks with employees in the workforce.
• High-performance Payroll system ensures more excellent technical stability for large corporations.
• Access to the system via the web, without the need for local installation on servers.
• Through a report generator, it offers the provision of managerial reports of the payroll management.

The Benefits of Payroll Outsourcing

Outsourcing payroll has a lot of benefits when compared to managing payroll in-house. Payroll can get complicated and time-consuming most of the time. To avoid such complexity and burden, most of the companies prefer to outsource their payroll services.

Payroll processing is not just about paying the salary to your employees. It includes a lot of work like calculating taxes, deductions, understanding payroll laws, etc. Payroll is a complex process and to avoid all the complicated procedures it involves, most of the companies outsource their payroll.   

There are a lot of benefits of outsourcing payroll and we have listed a few of them.

1. Saves your money and time

Payroll management is non-revenue generating yet a very important process for every company. Therefore, payroll processing needs a lot of time and attention.

At times, even minor mistakes can lead to major payroll problems. Payroll management requires a dedicated team and a high budget for smooth operations. Payroll rules are changing constantly and if your team is managing the payroll, then they must be updated with these new rules to avoid penalties.

Hence, the payroll processing can consume a lot of your time and money. By outsourcing your payroll, you can save your time and money which you can use in improving your business.

2. Increases reliability and accuracy of data

Payroll outsourcing companies are experts in managing payroll and hence they can produce accurate payroll records. Accurate payroll process depends on a lot of factors. You have to be up to date in the payroll industry.

Payroll companies can come with cutting edge technology that can easily automate the payroll and the data could be stored easily over a cloud system that can be safe. The payroll managed by these payroll outsourcing companies is more reliable and efficient.

3. Keeps Your Business Compliant with Laws

Payroll rules are changing very often. Therefore, if you are managing the payroll by yourself, you will need to stay updated on hundreds of laws related to your state and industry. This is an extremely challenging, cumbersome, and non-productive task. And no matter how hard you try, you are always at risk of penalties from the government on missing any deadline.

But this is a day to day work for payroll agencies as this is their main bread and butter. The payroll outsourcing companies are well versed in all new rules and changes in government laws. Thus, the chances of mistakes are minor and they will make sure that your payroll is calculated as per the latest laws. Even if they make a mistake, the liability is on them and not you.

It improves security

If your company’s payroll data is stored on an in-house server or network that isn’t fully secure, you could be vulnerable to cybercrime. Online security is increasingly open to risk and data theft can seriously damage your company’s operations and reputation.

However, if you outsource your payroll, all confidential information will be stored on secure data servers. Professional payroll companies invest in the latest cyber-security technologies and have the right people, software and security measures in place to guard against data loss and cybercrime.

Payroll Expertise on Demand

With payroll outsourcing redirected to the hands of Certified Payroll Experts, you now have a team of world class experts  monitored and managing the process. What this peace of mind truly presents to you and the company is an opportunity to on-board a team of new skills and capabilities. The more diverse your team is in handling the one system that ties your company together – the more likely you’ll see positive flow on effects towards growth and competitive advantage,

Things you may not know you can do with your RRSP

An RRSP is a great way to save for retirement and cut your tax bill. But there are other ways you can use your RRSP to achieve your goals.

For most people, a registered retirement savings plan (RRSP) is a way to save for retirement and pay less income tax. True, RRSPs remain a great tool for retirement planning. But, there are some other really useful things you can do with them. Check out some of the other ways you can use your RRSP to achieve your financial goals

Buy your first home with the RRSP Home Buyers’ Plan

RRSPs give first-time home buyers the ability to co-ordinate their RRSP strategy with their home purchase. What can you do under the Home Buyers’ Plan? You and your spouse can essentially each borrow up to $25,000 from your RRSP to buy your first home.

Go back to school with the Lifelong Learning Plan

You can also use an RRSP to fund your or your spouse’s education under the Lifelong Learning Plan. Similar to the Home Buyer’s Plan, any withdrawals for the purpose of training or education are tax free. This is, provided you use the government form RC96.

Split your income with a spousal RRSP

Splitting income between yourself and your spouse is a great way to reduce taxes. There are two ways to accomplish this using an RRSP.

Why tax planning should not be the key driver of investment decisions

Ishan has just started his career. Of late, he has been getting calls from vendors trying to sell him products with tax benefits, pushing him to invest in them before the financial year ends. The list includes PPF, Ulips, life insurance, ELSS, pension fund, and NPS, which takes his total tax deduction to around Rs 2 lakh. Ishan struggles to meet the annual target given his limited income, but the lure of tax saving is high.

Personal financial situations are different at different stages of life. As he is still young, Ishan can save and invest, but it is likely that his shortterm needs would be higher. By locking his money in tax saving products, which are typically long-term products, he might be making a mistake. He may find it difficult to keep up the investment required, or draw on it when needed.

This common mismatch, especially for young investors results in dormant PPF accounts, discontinued subscriptions and missed premium payments. If Ishan tries to access the money in need, he is likely to face penalties, lower realisation values or high costs. What he does to save taxes should, therefore, fit his overall personal financial situation and needs.

Tax planning is an integral part of financial planning, but should not be the key driver of investment decisions. Once he figures out his financial plan, putting aside money to make the most of the available tax breaks will become easier. Given his young age, if he finds that setting aside about 20% of his income for retirement is adequate at this stage, he may find that he is already doing it with his PF (Provident Fund). He may, therefore, not need PPF, NPS or VPF at this time.

For investors like Ishan, liquidity needs may be higher due to unexpected expenses in the early stage of their lives. He may need a term insurance much more than a Ulip; health insurance to cover his family; and might invest in a property and get tax breaks. It might be a wiser thing to actually pay the taxes and retain the flexibility.

Tax Guide for Small Business

This publication provides general information about the federal tax laws that apply to you if you are a self-employed person or a statutory employee. This publication has information on business income, expenses, and tax credits that may help you, as a small business owner, file your income tax return.

Are You Self-Employed?

You are a self-employed person if you carry on a trade or business as a sole proprietor or an independent contractor.

Trade or business. A trade or business generally is an activity carried on to make a profit. The facts and circumstances of each case determine whether or not an activity is a trade or business. You do not need to actually make a profit to be in a trade or business as long as you have a profit motive. You do need to make ongoing efforts to further the interests of your business.

Limited liability company (LLC). A limited liability company (LLC) is an entity formed under state law by filing articles of organization. Generally, for income tax purposes, a single-member LLC is disregarded as an entity separate from its owner and reports its income and deductions on its owner’s federal income tax return. For example, if the single-member LLC is not engaged in farming and the owner is an individual, he or she may use Schedule C.

Sole proprietor. A sole proprietor is someone who owns an unincorporated business by himself or herself. You also are a sole proprietor for income tax purposes if you are an individual and the sole member of a domestic limited liability company (LLC) unless you elect to have the LLC treated as a corporation.

Tax Planning Strategies For Year End

Year-end for many farm operations and many farmers means scrambling to find ways to reduce or defer tax bills.

• Are you continually deferring grain or livestock cheques to the new calendar year because your taxable income is too high?

• Do you buy inventory, such as chemicals, seed or fuel to raise your expenses and lower your tax bill?

• Do you ever buy new equipment to avoid lower your taxes?

• Do you panic in late November and ask your accountant for last-minute tips on reducing your taxes?

Commodity Marketing Plans

If you currently sell grain or livestock as the bills and other financial obligations come due, you could benefit greatly from a marketing plan. Producers who don’t have a solid plan can be forced to sell at lower prices. Others put off paying bills hoping to get a few extra cents per bushel, when the interest on the bills accumulates and their credit rating drops.

Incorporation

Farmers who incorporate their operations may find significant tax savings because the business is taxed at a lower rate than personal income. Individual shareholders of the corporation report dividend income or income earned from share redemption on their personal tax returns.  The corporation will typically assume ownership of the inventory, machinery and equipment from the sole proprietor entity. The incorporated business owner can choose the fiscal year end that is best suited to the operation. It can be December 31 or any other time during the year that provides the best financial results for you. Discuss incorporation with your accountant to make sure it will benefit your operation. Incorporation can also be used as an effective part succession plans.

Long term planning

It’s a good idea to meet with a tax accountant if you are planning to retire in the next five years. It can help ensure you and your operations minimize taxes. This is particularly important if the farm is going to be sold. The sale of land will generate a large amount of capital that carry you through many years of retirement. Tax specialists can help you shelter taxes as much as possible and reduce the amount you must pay. If your succession plan involves selling land to the next generation to fund your retirement, then capital gains exceptions will be important. This exception allows for $1,000,000 per person before taxes are calculated on the sale. It is important to discuss any potential land sales with your accountant to get advice on how to minimize the amount of your income tax.

Other Options

Simple things, like changing or setting loan payments to match periods of strong cash flow can be used as an overall strategy to manage income.  This can reduce the panic selling that can sometimes happen when loan payments or bills need to be paid by a certain date.  It is a good idea to review your operating line of credit on an annual basis to make sure that the size is still sufficient for your operation. If you find it tight, it may be worth a discussion with your lender to see about a possible increase to provide some more room. Cash advances may also be a tool that can be used to reduce interest costs by allowing you more time to market your grain.

Tax Planning Guide

The end of another financial year is fast approaching and as your accountant, we believe part of our client brief is to help you minimise your tax liability within the framework of the Australian taxation system.  The purpose of this guide is to highlight some end of year tax planning opportunities, but you need to act quickly and we encourage you to schedule a meeting as soon as possible to assess your options and the steps you need to take well before

Delay Deriving Assessable Income

Please note, not banking amounts received before June 30 until after June 30 does not qualify because the income is deemed to have been earned when the money is received or the goods or services are provided (depending on whether you are on a cash or accruals basis of accounting).

Cash Basis Income – Some income is taxable on a cash receipts basis rather than on an accruals basis (e.g. rental income or interest income in certain cases). You should consider whether some income can be deferred in those instances.

Consider delaying your invoices to customers until after July 1 – this will push the derivation of the income into the next financial year and defer the tax payable on that income. If you operate on the cash basis of accounting you simply need to delay receiving the money from your customers until after June 30.

Lump Sum Amounts – Where a lump sum is likely to be received close to the end of a financial year, taxpayers should consider whether this amount (or part thereof) can be delayed or spread over future periods.

A tax deduction can be brought forward into this financial year for expenses like:

Employee Superannuation Payments including the 9.5% Superannuation Guarantee Contributions for the June quarter (that have to be received by the Superannuation Fund by June 30, to claim a tax deduction).

Superannuation for Business Owners, Directors and Associated Persons

Wages, Bonuses, Commissions and Allowances

Contractors

Travel and Accommodation Expenses

Trade Creditors

Rent for July (and possibly extra months)

Insurances

Printing, Stationery and Office Supplies

Advertising including Directory Listings

Utility Expenses – Telephone, Electricity & Power

Motor Vehicle Expenses – Registration and Insurance

Accounting fees

Subscriptions and Memberships to Professional Associations and Trade Journals

A deduction for prepaid expenses will generally be allowed where the payment is made before 30 June 2019 for services to be rendered within a 12-month period. While this strategy can be effective for businesses operating on a cash basis (not accruals basis), we never recommend you spend money on items you don’t need. However, paying expenses in June that are due in July could save you some tax this financial year and provided your cash flow permits, it makes good business sense.