Payroll management is the process through which
workers receive their corresponding salary from the company that hires them. It
is a simple process but, nevertheless, should take into account different
aspects: the own payroll, social security, tax obligations, etc .
Responsibilities
when doing an employer's payroll include:
·
Quarterly reporting
·
Employee tax withholding
·
Payment
of tax withholdings
·
Management of contributions to employee health
and pension plans
·
Handling disability leave evaluations
·
Notification to the General Pension and Social
Security Authority of the registration and cancellation of employees in the
company
These tasks are time consuming and can be headaches
for business owners , especially when taxes are late.
We consider in this article the advantages and
disadvantages of outsourcing payroll administration:
Advantage
1. Focus on
the business
Outsourcing your payroll allows you and the rest of
your staff to focus on the main operation of the business and dedicate yourself
to tasks that add more value to your product or service.
2. Reduction
of administrative tasks
The payroll process is time consuming. Its
outsourcing can make your company more agile by reducing the number of
employees required for this type of administration activities.
3. Cost
savings
If your company has fewer than 20 employees, there
is a good chance that you can save money by outsourcing your payroll
operations.
Find out how many hours your employees spend on
payroll activities, calculate how much you are spending and compare the number
of plans offered by various payroll providers.
Be sure to factor in the money your business spends
on tasks like printing and distributing checks, creating tax documents, and the
like. You will probably be surprised by the result.
4.
Prevention of SAT sanctions
A payroll service provider is often better equipped
to calculate deductions accurately and consistently.
According to the Tax Administration Service, 40% of
small companies pay an annual fine of 25 thousand pesos, on average, during
filings for late or incorrect payments.
5.
Evaluation of employees in probationary period
You may enroll probation or training personnel in a
system that does not yet represent direct hire, helping to reduce the
possibility of prematurely incurring legal or employment obligations.
6.
Deductibility of the payroll service
If you are looking for savings for your business,
you can achieve them without affecting the situation of your employees, since
the payroll outsourcing service is fully deductible.
Disadvantages
1. Loss of
control
Handing over your payroll operations to a third
party removes control over financial information and the confidential data
associated with it.
Also, the data could be less accessible to your
company because it is stored on the server of the company that will provide
that service.
And even keeping your data internally confidential
could be less risky.
2. Threat to
security and confidentiality
The life blood of any business is the information
that is kept running.
If payroll, medical records or any other
confidential information that you have is passed on to the outsourcing company,
there is a risk that confidentiality could be compromised.
3.
Inconsistencies in the quality of work
Another possible disadvantage is that the company
could find inconsistencies in the quality of the work they provide.
Wages may not be the right amount; taxes not being
deducted correctly, among other inconsistencies.
4. Decreased
sense of belonging
Feeling oblivious to your business may decrease
their loyalty and not "put their shirts on" 100 percent, which can
affect their productivity.
5. Increase
in turnover
That same disloyalty can lead to higher staff
turnover, raising the costs of hiring and training new employees.
How to
choose Payroll services in UAE?
First, you must make sure that the service they
offer you is legal and that your employees will not be affected by
miscalculated wages and benefits.
To do this, verify that the payroll administration
company is registered with the UAE Association of Human Capital Companies. You
will be surprised to know that of the approximately 3,000 companies that exist
in United Arab Emirates, only 16 have this registry.
As in everything, the wrong behavior of most of
these outsourcing damages the reputation of those who work well, so it is
important that:
Do a preliminary investigation of the provider of
the service you hire to know their reputation and what other companies they
serve.
Verify the legality of the hiring of personnel that
you carry out to ensure that your employees will not be affected in terms of
their employment condition and their benefits.
Read also: Evaluation
of internal control systems
A well
thought out decision
Whether or not to outsource, decisions must be
approached through a careful examination of the potential benefits in relation
to the organizational impact that will come with the decision. There should be
established guidelines for the task that these 'third parties' would have to do
and also a list of controls to which they will have to submit regularly.
