Businesses, wherever they are based, must pay the salaries of their employees in a timely manner. Where wages are not processed on time in a regular manner, staff morale can be negatively impacted and create an impression that the company is not financially stable.
Businesses must also ensure their income tax and social security compliance, in terms of withholding, calculations and reporting, is sound. Every country’s employment and tax system is different.
Any business entering a foreign market faces a number of employment and tax related challenges. By outsourcing your payroll function, you can free up your valuable time and resources to concentrate on running your business, with the comfort that all obligations and responsibilities are met in a timely and efficient manner in every jurisdiction of operation.
Payroll is a sensitive subject, as it deals with highly confidential information. It is therefore essential that a business should vet a potential outsourcing partner thoroughly. It is also important to remember that the business is ultimately responsible for the payment of withheld income tax and both the employer and employee portions of social security and other contributions. These are some of the questions that you should ask a potential payroll service provider:
- Do you have the necessary resources, skills and systems to issue and manage payroll?
- What processes are in place to ensure the timely processing of payrolls?
- Can you process salaries and/or wages hourly, weekly, fortnightly or monthly?
- Can you process staff hours, overtime, holiday and sickness?
- Can you process withholding, reporting and paying social security contributions and income taxes?
- Can you process ad hoc additional payments or deductions?
- Can you process allowances and expenses?
- Can you process other payments, deductions and benefits – retirement savings, health care benefits, long term disability, life insurance?
- What payment service options do you offer?
- How do you ensure that filing deadlines and deposit requirements are met?
- Can you process year-end requirements such as tax returns for both the employer and employees and compiling payroll accounting records for the employer?
- Can you arrange documentation for new or departing employees?
- Can you prepare revenues payable and remittance submissions to tax office?
- How do you stay up-to-date with new legislation or regulation?
- How secure is the payroll data?
- How is payroll data protected / recovered?
- Can you accommodate projected growth requirements?
- Can you assist with payrolls in other Asian countries and deal with their regulatory environments?
- Can you manage multiple currencies?
The obvious benefit of outsourcing payroll services is freeing up your resources to focus on your core strategic objectives. Advantages should also accrue in respect of:
- Reduced operating costs
- Statutory compliance and consistent service delivery
- Access to the latest technology, as well as skilled and dedicated payroll resources
- Access to a secure, risk-free and confidential payroll environment
- Increased flexibility and responsiveness
- Streamlined internal processes and procedures.
Sovereign can provide a comprehensive but flexible outsourced payroll service that is tailored to each client’s specific requirements. Typically, the first stage of this will involve registering the employer and its employees with the local tax office and the government employment department, recording employment notices and contracts, obtaining bank details of the employer and employee, issuing tax codes and, finally, inserting all that information in the Sovereign payroll system.