What is Payroll? | Definition | Importance | Explained

When you hear the term ˜payroll', what pops up in your head? œWell¦ paying salary, keeping track of holidays¦ you may say. But to be precise, payroll is defined as a financial list or record of payments that employers have to provide to employees as compensation.

To employees, payroll is a protection to their labor rights. At the beginning of every new job, employees are asked to sign a contract that covers all the negotiated terms regarding payroll, like salary, bonuses, commissions, awards, annual leaves, etc. By signing the contract, it is an acknowledgment of both the company and the employee that these terms are to be conformed.

As to employers, not only is a firm's payroll record vital for financial and operational reasons, but it is also a requirement for them to avoid penalties from violating a certain country's labor policies and regulations. Take Hong Kong as an example, if the employers delay the compensation for just a week, their employees already have the right to file a complaint to related government bodies.

However, a more compelling reason for employers to comply with a sustainable and accurate payroll is employee morale! No employee would ever want to work for a non-promising company, right? Here's when payroll plays its magic “ it is a guarantee to employees that the effort and time they rendered are being appreciated and rewarded.

Thus, whether you are viewing from an employer or an employee's perspective, payroll is still of utmost significance. Trust me, it is a lot more than just a monthly salary.
What does payroll outsourcing mean and what do payroll outsourcing companies do?

Nowadays, payroll outsourcing has become a common solution for all sorts of companies to handle their HR matter. By definition, payroll outsourcing simply means engaging a specialized third-party organization to handle a firm's payroll-related administrative activities.

 According to recent statistics, payroll outsourcing is forecasted to reach US$10,336 million by 2023 in the global market with a constant CAGR (Compound Annual Growth Rate) of 4.4%. it has even been foreseen that payroll would soon be entirely outsourced globally. So, the first question is, what exactly are these payroll outsourcing companies offering that could make such a significant impact on the entire business ecosystem?

 As a matter of fact, payroll outsourcing companies can provide a comprehensive set of HR assistance for their clients. From setting up an automated payroll system for the client company, recording employee's data, and overseeing their work hours, to calculating wages and salaries, withholding required income taxes, and making payments via checks and direct deposits, a payroll outsourcing company is here to handle them for you all along. Not to mention, payroll outsourcing services also help administer employee benefits to ensure employee morale, maintain the company's payroll accounts, as well as providing accurate and organised payroll reports to the business.

 From the above, one can see why these payroll outsourcing companies are leading a global business trend. By moving a complex HR task from in-house to outsourcing, these services, without a doubt, reduce some weight off the client's shoulders.
Why Payroll Outsourcing?

At this moment, if you are thinking, why do I need a third party to help me pay for my employees? Just hear me out. There are reasons that corporations are outsourcing payroll and the key takeaway here, is that handling an in-house payroll process is more laborious and time-consuming than one can expect. So, with payroll outsourcing, what companies can benefit from are:

    Reduce Costs

It is proven that payroll outsourcing organizations can help reduce a company's operational costs. According to recent market research, payroll outsourcing has helped companies result in a cost savings of 20% or more while decreasing in-house business costs. The reason is, payroll consists of a lot of thorough details and steps to complete. If handling in-house, a company would have to expand its costs on maintaining a robust HR department and hiring staff members to administer and monitor any sort of workforce activities. Other than that, the cost of maintaining a payroll software system can also be costly. By hiring a third party payroll outsourcing agency, such cost can be eliminated and the system can also be monitored by the agency.

    Avoid Penalties/Violations

The other benefit of hiring a professional payroll outsourcing organization is to ensure better compliance and avoid penalties from violating the specific labor regulations and policies. When it comes to payroll, a different country has a specific set of rules to follow. For example, some countries like the US require employers to withhold a certain amount of income from employees as an income tax payment. Other places like Hong Kong require employees to fill out tax forms by themselves but demand employers to follow the MPF (Mandatory Provident Fund) guidelines. As business is going global, corporations often expand their branches to other foreign countries with little knowledge about their legal policies. Companies violating government policies may end up receiving penalties and fines, and these concerns can be eradicated with the help of a payroll outsourcing company.

    Time-saving

After all, the main reason to outsource a company's payroll process is to save time for other matters in the business. As mentioned before, payroll is a timely and redundant work that involves great attention to details. From recording each employee's data and work hours, and handling new hires and terminations, to supervising benefit deductions for employees, and summarizing a comprehensive report, all these work demands a significant amount of time. Let alone the time spent on training a team of responsible and sensitive staff. This is when payroll outsourcing companies become handy “ they take the stress away from you so you can focus on other important aspects within the company.
Payroll Outsourcing Services Hong Kong
Conclusion

Yes, payroll process can be laborious and redundant. But that's why we are here to relieve your stress! Ever since established in 2015 by Shelly Tsao, RedMountain Asia has targeted to provide to our clients nothing but professional payroll services across the Asia Pacific Region. As a client-oriented and results-driven organization, we are here to deliver:

    Precision

    Doubtlessly, payroll represents an elemental part of a company's administrative operation. It encompasses data of the entire workforce within a firm, wages and salaries of employees, and even their various allowances and benefits. A well-managed payroll embodies accuracy, and that's what our payroll team in RedMountain Asia values. Our team exclusively hosts a reliable and successful human resources management system or payroll software called I-Red. With I-Red's sophisticated features, clients are ensured to receive error-free payroll processing and a transparent platform for data access.

    Credibility

 As representing a professional organization, our payroll team also aims to provide security and credibility. With over 20 years of experience in Human Resources and payroll-related administration, our team serves as a specialist partner to our clients with our strict and integral code of conduct. We surely respect our client's confidentiality and private information. Not only do we want to assist our clients to achieve their goals, but we also want them to be able to count on us on each step of the service.

    Philosophy

 Our philosophy is to assist our clients in balancing their focus on conducting their core businesses and people management by increasing operational efficiencies and reducing back-office costs. Through providing comprehensive backend support, we incorporate various payroll services including payroll-related compliance, leave management, labor law compliance, employee self-service portal, and tax filing. We are here to provide solutions with a human touch “ which means, we do, and we care.                                       

Payroll is a regular monthly task for every organization. It requires precision, focus, and consistency. It is repetitive and time-consuming. Outsourcing your payroll to us could ease your burden of this essential yet tedious operations. It allows your time and resources, especially your precious manpower, to focus on strategic tasks. No more backlog, just thriving business and employees.

Tags: