A typical pain point for most small businesses is payroll, especially if this responsibility is tasked to an employee who works in other areas of the business and is already overloaded. Or maybe this falls on your shoulders and you want to start thinking bigger picture and can’t be down in the weeds.
Payroll outsourcing is growing in demand, with the benefits allowing businesses to scale faster and actually focus on the revenue-generating areas of the business. If this is new territory, let’s go through the ins and outs and lay down a guide to payroll outsourcing.
How it Works
Let’s go through how this works for an average small business. Typically there is one or a few people tasked with managing the accounting, payroll and finance functions for the business. Payroll outsourcing in Brisbane, and all over Australia, takes payroll off their hands to complete a compliant and timely payroll each pay cycle. Depending on your business and the resources available to you, an outsourced payroll solution can be as autonomous or involved as you like, but employee records and reports will be accessible to you through a shared platform that is managed by your dedicated payroll partner. As employees leave and join the business, your outsourced payroll team will adjust and optimise so that you can work on other areas.
Outsourced payroll isn’t someone simply picking up where you left off. They will actually do a full audit of your processes, highlight what they are going to change and then design a purpose-built solution for you. It will also give you access to greater reporting functions, some of which you might never have seen before or haven’t had the time to take a deep dive into. This will typically benefit other areas of your business and will bring some clarity to your small business.
Since Single Touch Payroll was introduced in 2018, the payroll function has changed to include more employer reporting requirements and an overhaul of the payment summary issuing at the end of the financial year. These enhancements have made payroll more streamlined, but there is more responsibility to consider, as well as businesses needing to upgrade their software to be able to facilitate the new processes. For many small businesses, this was the prompt they needed to get onto outsourced payroll, as these professionals are trained in the new compliance procedures and have the best tech in the industry, which you can leverage as their client and save you investing in new software.
Simply put, businesses have decided that it’s worth investing in outsourced payroll and the suite of skills and software that comes with it, rather than buying the software themselves and having to invest the time and effort into learning the software and new payroll framework. Which option makes more sense for your business?
You also don’t want to be caught out underpaying staff due to award wage changes, which has happened to big brands who haven’t kept a close enough eye on the national award wage. Your outsourced payroll partner will apply any industry changes, keeping your business compliant and up to date with the latest legislation and award rates. Given that businesses are required to upgrade their software, pleading ignorance is no longer acceptable in the eyes of the law, so you want to know that you won’t have any mistakes coming back to bite you later on.
Time and Talent
You might not think that your talent pipeline has any bearing on your payroll practice — but it sure does. If you are like most small businesses, each of your employees wears a few different hats. This might seem like a benefit to your bottom line, but is anyone truly mastering their craft or are they just getting by?
Outsourcing your payroll is going to free up the experienced minds you employ, reallocating them to growth areas of the business. Don’t be caught in the hamster wheel of a reactive business that only puts out fires and services what’s in front of them. Instead, carve out your own path proactively.
The time you will save by switching to outsourced payroll will be revolutionary for your small business. It might even give you the flexibility to reduce your headcount if that is what you want. You might also find that having a robust payroll solution actually attracts new employees, business partners or investment opportunities. A small business shouldn’t feel like a haphazard startup and decisions like pursuing outsourced payroll might show your internal and external stakeholders that your business is open to growth and change.
If you are not sure what we mean, think about your onboarding process and put yourself in the shoes of a new starter. Are the processes clear, modern and positioned in a way to get someone excited about joining your small business? If you can see some red flags in the eyes of new talent, then outsourcing payroll might just be that tool you need to further legitimise your operation.
Imagine not having those butterflies in your stomach every end of June or on the eve of payday, because you know that payroll is not only handled but being looked after by a team of professionals working in the best interest of your small business.
Payroll outsourcing is a great option for small businesses who are ready to level up, streamline their payments and devote time to other areas of growth. Chat to some providers to understand what they can bring to the table, and insist on seeing how the dashboards, reporting and workflow will work if you are to take them on. It’s also a good idea to have some of your key stakeholders in on those initial meetings so that you can have a well-rounded understanding of how this will impact the entire team.