Overview: Payroll Outsourcing Services Singapore

What are Payroll Outsourcing Services?

In today's context, payroll outsourcing services is usually the broad term used for the outsourcing of the Payroll function as well as other ancillary Human Resources (HR) tasks. These tasks may include leave management, claims processing, statutory compliance, and taxation. Most providers of payroll services are accounting firms with an in-house team of experts ready to offer a wide range of payroll management services.

What is the difference: Payroll Outsourcing V Payroll Software

In our related post comparing Payroll Outsourcing Vs Payroll Software, we explore the differences between the two options for business owners to consider.

Payroll Outsourcing

Payroll outsourcing is whereby a part or the whole function of payroll administration is outsourced to a payroll service provider. More often than not, the payroll specialist in the outsourcing firm will adopt a payroll management software to ensure accurate payroll processing. This payroll system is essential for complex payroll tasks or niche payroll requirements. The payroll outsourcing company may offer you an account to view or approve the payroll report for every salary period before salary payment. Depending on the option or tasks you opt to outsource, additional components or modules such as leave or claims processing can usually be included as part of the payroll management services. In a nutshell, should business owners outsource their payroll function, they will have more of a supervisory or approval role in the payroll process. Modern software is also designed to have comprehensive reporting functions often hosted on cloud platforms. This streamlines business processes and allows payroll matters to be resolved on the go.

Payroll Software (In-house)

If you wish to have an in-house payroll team, purchasing a Payroll Software will be necessary for basic payroll operations. Although not all payroll operations require a payroll software, it is advisable to have one as this will significantly prevent errors during the payroll process or the computation of complex payroll processes. A payroll software is an essential tool for payroll preparation. For most companies that has an in-house payroll department, it is more likely than not that the preparation of payroll is done through a payroll software. The Payroll software, like those used by external providers, has remarkable features that facilitate detailed reporting. From variance reports to multi-country payroll processing, these systems enable multinational corporations to have an efficient cross-border Payroll solution.

What Payroll Services can you outsource?

In Singapore, a few more common Payroll services are being outsourced. These include monthly payroll services (Payroll Processing / Payroll Computation), compliance (Tax filing requirements), Leave Management, Claims processing, Shift scheduling, and Attendance. We will elaborate slightly on each.

Monthly payroll services

This is the most intuitive segment to outsource. Corporate service providers will assist you in salary calculation, compliance against payroll regulations, maintaining payroll ledger and information, and all other ancillary matters to ensure a smooth payroll operation for the month. These payroll experts will likely be well-versed in all the various statutory contribution rate changes, rate legislation amendments, and regulatory requirements.

The payroll provider may also assist in maintaining the bank account details of all employees and help you with the timely payment of salary. In some cases, having a payroll provider is also an alternative for sensitive payroll and may offer a confidential payroll experience, such as the issuance of confidential pay slips.

Compliance

As a statutory requirement directed by the Inland Revenue Authority of Singapore (IRAS), all companies with five or more employees must be included in the auto-inclusion scheme (AIS) starting from Year of Assessment 2022. Most software that service providers adopt would likely have an automatic IR8A and AIS submission process. Outsourcing of payroll likely facilitates compliant payroll practices and ensures that employment laws are observed. For certain forms, such as IR21, companies may be less familiar with the tax requirements regarding forms that are not commonly used. Having an outsourced team of experts at your disposal may be critical in such a situation in ensuring tax compliance with regulations.

Leave Management

Payroll software has evolved to incorporate leave management as a module. Most providers of payroll services will also offer software that encompasses this feature. The software will have employee self-service portals that enable them to raise leave applications. Leave approval can be done through these portals (usually supported by browsers and mobile applications). Such a module will reduce the administrative burden on the company's Human Resources division.

Claims Processing

Similar to Leave Management, employee self-service portals will allow efficient claims processing for employee benefits. Approval chains are pre-set, and most portals will allow the storage and archiving of supporting documents for claims processing. To a certain extent, having a cloud solution enhances documentation and offers a better audit trail that uplifts a company's internal control.

Shift Scheduling and Attendance

Not all industries may require this service, and usually, specific types of businesses, such as manufacturing, construction, or shift-based companies, will be able to utilise this function. Nevertheless, payroll service providers offer this feature to ensure that the whole payroll operation is smooth. Do note that the shift scheduling and attendance module may bring about a computation nightmare if done manually, as they will likely be paid by the hour. (Consider overtime rates, varying shift timings, overtime capping, etc.)

Advantages of Outsourcing Payroll Services

Cost Efficient

Engaging a payroll service provider is often a more economical option than having an in-house payroll officer. Most providers of payroll services offer competitive packages based on the number of employees per month. This pricing mechanism allows you to scale without constraints and is also more cost-efficient during months that may encounter cyclical turnovers.

Payroll expertise

Most payroll outsourcing vendors work in teams. Having a team of experienced professionals review your payroll may be an advantage that you would value. This is more true in scenarios where there is complex payroll computation or unique monthly payments. As a provider of payroll services for numerous firms, their core competencies and experience in payroll outsourcing solutions are good additions to your arsenal when time calls for them.

Software Mastery

An in-house team may not be familiar with the functionality and interface of the payroll software. In less severe cases, more time and resources will be required for training to ensure competency. In severe cases, errors may occur and could affect the release of monthly salaries. Payroll service providers usually work with software companies to ensure that their team is proficient in the software. Moreover, should there be any issue with the payroll system, it is best for the service provider and the software firm to liaise instead.

Continuity and risk of turnover

There will be a low risk of continuity issues, especially when you partner with a reputable provider of payroll services. Compared to an in-house payroll officer, you may be faced with the possibility of employee turnover. Considering the confidentially of payroll matters, who do you think will have to cover the HR duties?

Cost of Payroll Outsourcing Services in Singapore

The cost of payroll services has been relatively competitive. Most service providers offer a base fee for companies with extremely lean headcounts. A cost per additional headcount is then computed for every additional employee. Add-on services such as leave modules or claims processing modules will usually command additional fees, depending on the various price plans.

Outsourced Payroll Providers: Choosing the one that suits you!

Select a payroll provider that suits your needs. You should understand more about the payroll outsourcing vendor, the software they are using, how they can help you with business compliance, and how they can further your general business strategy. The cost of payroll services should not be the sole determinant in selecting your business partner. Finding a reputable company that offers timely delivery and meets your requirements is more relevant.

At OakTree Accounting and Corporate Solutions, our team is led by an experienced payroll partner who has been in the field for more than 20 years. We offer timely payroll services to all business sizes and are committed to ensuring that you stay compliant with all government statutory boards (CPF, MOM, IRAS). If you are exploring how payroll outsourcing services can complement your business strategy, do feel free to reach out to us now!

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DISCLAIMER: The views and opinions expressed in this article are those of the author and do not necessarily represent the views and opinions of any individuals or organizations with which the author may be affiliated, either in a professional or personal capacity, unless explicitly stated.

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