How to: Outsource Payroll – Everything You Need to Know

12 Nov 2021

Our guide to payroll outsourcing in Australia will teach you how to create an effective, efficient payroll solution that works for your company and your employees.

Qualified payroll providers are trained professionals, which means they work efficiently and accurately. They assist in areas including:

  • calculating employee salaries;
  • ensuring your payroll meets local regulatory compliance;
  • estimating employee benefits;
  • setting up, implementing, and managing payroll software; and
  • filing documents with the relevant tax authorities.

Whether you want an efficient in-house payroll system or would prefer to outsource your payroll function altogether, here is everything you need to know about outsourcing payroll.

Why is payroll so important?

Beyond ensuring that employees are paid correctly and on time, getting your company payroll right is also a legal requirement. Recruiting good employees can be challenging, and late or incorrect payments can make it hard to retain talent. Incorrect payroll processes can also lead to costly fines, low employee morale, and damage to your company’s reputation.

That makes staying on top of your payroll essential. You need to implement any legislative changes as they occur and maintain the correct entitlements for your employees.

How does a payroll system work in Australia?

Expert payroll outsourcing vendors use advanced, all-in-one Human Resource Management System (HRMS) solutions to automate and streamline payroll processing. This eliminates the need for manual calculations or data input, which can significantly increase the speed and accuracy of your pay runs.

More streamlined payroll processes also enhance productivity by enabling your HR team to spend their time and energy on core strategic business activities. Beyond this, your company would not need to maintain the cloud security to support it – generating yet more savings. At BoardRoom, we use Definitiv as a complete, flexible, all-in-one payroll solution for our clients.

How outsourcing payroll can meet your unique needs efficiently and accurately

An experienced payroll outsourcing provider in Australia should personalise their service to meet your specific needs and use a payroll system that can apply:

  • Infinite costing levels: you can assign your costs wherever you need them across different departments, work orders, and tasks, which enables easy cost distribution and management.
  • Flexible structuring: if you have employees on different awards and pay calendars (including shift work and overtime), we can accommodate your needs. Feel confident knowing that you are paying everyone the right amount at the right time.
  • Numerous pay cycle options: we can organise your pay cycles around your company’s needs, offering different pay cycles for different departments.
  • Multiple entities: if you manage multiple entities within your business, we enable you to access each separate business under your one account.
  • Award interpretation: our innovative system recognises employees who are covered by multiple awards and can calculate their pay accordingly.

Enjoy the benefits of payroll automation

Our payroll automation can quickly, and accurately calculate your payroll data. Other benefits include:

  • Single touch payroll approved: Our comprehensive system is an approved Single Touch Payroll provider, which means you avoid any lengthy end-of-year processing. Instead, you can send your documentation to the ATO quickly and easily at the touch of a button.
  • Seamless integrations: Our payroll system will integrate with several well-known accounting and enterprise resource planning (ERP) systems.
  • Date-driven updates: The system can also quickly identify and interpret changes to employee job titles or new policies.
  • Instant back pays: Easily calculate and process employee salaries and back payments correctly while accounting for previous pay runs and any subsequent changes.

Wondering how best to calculate a payroll budget with taxes in Australia?

Like most countries, businesses in Australia will consider taxes when they calculate payroll. An expert payroll outsourcing provider will know how to factor in these variables and can guide you through the process, identifying any potential problems while providing practical solutions to save your team time and resources.

More specifically, payroll outsourcing providers can help you with:

  • calculating employee pay (including any benefits);
  • calculating employee income tax;
  • calculating payroll tax;
  • submitting retirement contributions and other deductions;
  • filing taxes with the relevant tax authorities;
  • allocating funds to creditors;
  • receiving funds from debtors;
  • keeping detailed payroll records; and
  • ensuring all data complies with government requirements.

What’s the difference between processing payroll in-house and outsourcing it?

When you process payroll in-house, your payroll staff are employed by your organisation. This means you are responsible for paying their:

  • remuneration (including salaries, superannuation and benefits);
  • onboarding and set-up costs; and
  • day-to-day office expenses, including electricity, computer hardware, software, office supplies, and office space.

If you choose to outsource your payroll, however, you will work directly with an expert payroll team in Australia to ensure that you are compliant with local laws and regulations. They will provide efficient payroll services with clear, defined terms, and simply invoice you for these as needed. This frees up your time to focus on other business needs without having to manage additional staff.

Things to consider when outsourcing payroll

Outsourcing payroll in Australia can offer several benefits such as cost savings, increased efficiency, and access to specialised expertise. However, there are also potential risks associated with outsourcing payroll. Before you consider outsourcing your payroll, here are some factors to consider:

Data Security and Confidentiality

When outsourcing payroll, sensitive employee data, including personal and financial information, is shared with the external payroll provider. There is a risk of data breaches, unauthorised access, or mishandling of confidential information. It is crucial to ensure that the outsourcing provider has robust data security measures in place, including encryption, secure servers, and strict access controls.

Loss of Control and Flexibility

Outsourcing payroll means relinquishing some control over the payroll process. You may experience challenges in addressing urgent payroll issues or making last-minute changes. This can be managed by establishing clear communication channels and service level agreements with the outsourcing provider to maintain control and ensure prompt resolution of any payroll-related concerns.

Communication and Service Quality

Effective communication is crucial for accurate payroll processing. Outsourcing to a third-party provider may introduce communication challenges, especially if there are language barriers or time zone differences. It is essential to establish clear lines of communication and ensure the outsourcing provider offers responsive and reliable customer support.

To mitigate these risks, it is advisable to thoroughly research and select a reputable outsourcing provider with a proven track record in payroll services. Conducting reference checks, reviewing contracts carefully, and maintaining regular oversight of the outsourced payroll process can help minimise potential risks and ensure a smooth and compliant payroll operation.

With 50+ years of experience in assisting companies of all sizes in Australia with their payroll outsourcing requirements, you can entrust BoardRoom with the security and scalability of your payroll operations, at the same time prioritising the core aspects of business growth.

Outsourcing payroll in Australia makes sense

If your HR team is feeling the pressure to do more with less, now is the time to consider outsourcing payroll.

Our team of payroll experts at BoardRoom can take care of your payroll needs, freeing up your team to refocus on delivering strategic HR imperatives like strengthening company culture and increasing employee engagement.

Speak to our payroll specialists today about how to outsource payroll services for your company. Let us help you to build the right foundations for your business with our industry-leading corporate service solutions, which include:

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Contact BoardRoom for more information:

George Lygoyris

Chief Commercial Officer
+61 2 9290 9667