Remuneration paid to staff, and the accounting thereof, is a fairly complex administrative process. Income tax, Fringe benefits, Pension Contributions, Medical Aid, UIF and numerous other calculations come into the fray. This legislation is often changing too, adding to the complexity.
It is for this reason that firms that employ more than a one or two staff members often decide to outsource their payroll functions to an accounting firm that provides (or specialises in) Payroll Services. These accountants can normally reduce the costs involved in having payroll trained employees in-house as well as the costs of systems and software needed to process payroll.
Wikipedia Definition:
Payroll Outsourcing
Businesses may decide to outsource their payroll functions to an outsourcing service like a payroll bureau or a fully managed payroll service. These can normally reduce the costs involved in having payroll trained employees in-house as well as the costs of systems and software needed to process payroll. In the UK, payroll bureaux will deal with all HM Revenue & Customs enquiries and deal with employee's queries. Payroll bureaux also produce reports for the businesses' account department and payslips for the employees and can also make the payments to the employees if required.
Another reason many businesses outsource is because of the ever increasing complexity of payroll legislation. Annual changes in tax codes, PAYE and National Insurance bands as well as more and more statutory payments and deductions having to go through the payroll often mean there is a lot to keep abreast of in order to maintain compliance with the current legislation.
