Creating Cost Efficiencies through Payroll
Payroll Spend is one of the biggest costs in most businesses today so needs to be carefully managed. Payroll taxes account for more income to the exchequer than VAT and Corporation Tax combined.
Prudent businesses ensure that the person responsible for their VAT and Corporation Tax have the necessary qualifications and experience to make the best decisions for the business when it comes to their taxes yet all too often the payroll is designated to a junior member of staff with little if any formal payroll qualification or experience.
While payroll software provides a useful tool for calculating and creating the necessary documentation, it is only as good as the information inputted. All too often, the team at Paycheck Plus find that the operators have failed to recognise the significance of personal circumstances that affect the calculations of their employees. Many Payroll operators believe that they can learn how to operate the software and then rely on that software to calculate the correct PAYE, PRSI and USC correctly. That may be the case, but more often than not, manual intervention is required to ensure that employees are being subjected to the correct rates of PRSI and USC and that the various payroll elements have been corrected subjected to the various taxes that may apply. “We regularly find discrepancies in the calculations that generate real cost savings for the employees and indeed, for the employers as these inaccuricies generally affect employers PRSI as well as the employee taxes.”
A recent meeting with a prospective client highlighted that their consultant, engaged to complete the year-end process and set-up the system for the year ahead had ticked the wrong boxes for the application of PAYE, PRSI and USC in one payment and two deduction fields. And, like many others, the consultant relied on the system to apply the correct PRSI class. By failing to manually intervene with the system based on the personal circumstances of certain employees a number of employees had 4% of their pay deducted unnecessarily while the employer overpaid by over 10% of the salary cost. The expertise of payroll professionals such as Paycheck Plus resulted in refunds exceeding €35,000, a significant saving by any standards.
For most businesses, the payroll function is not their core strength or profit making activity. The cost of payroll warrants consideration of how best it should be managed. Outsourcing payroll gives companies access to a team of payroll professionals who work in partnership with their clients to provide the most cost efficient solution for their payroll. Paycheck Plus works with their clients to ensure they structure their payroll to maximise cost efficiency for both employer and employee. Their IPASS qualified team will monitor the various payroll elements and advise on the most effective treatment of various payments and deductions while ensuring transparency and compliancy to meet Revenue, Social Welfare and Employment Rights audits. With payroll taxes being the primary source of income for the exchequer, it stands to reason that Revenue will be paying close attention to the detail within any payroll process. Ignorance of the requirements is no excuse so with the continuous changes in payroll calculations and employment regulations it pays to consider the best option for your business. One fine or penalty is often more than the annual cost of outsourcing your entire payroll operation while the savings due to expertise of the subject can make a real difference to the bottom line.
Outsourcing payroll generates other cost efficiencies too. As a routine back-office function the cost of processing payroll in-house brings no real value to the overall profitability of the business. It absorbs valuable time and resources that could be better utilised for profit making activities. In considering the cost of processing payroll in-house most people think only of the salary of the person processing. However, on closer analysis, it is surprising how the costs can really mount up. For example, it commonly known that the cost of employing a person is 3 times their salary made up of Employers PRSI, holidays, pension costs, utilities, office resources, recruitment and induction, on-going training, Health & Safety, Social events, Tea & Coffee, employer insurance, environmental and utility costs and so on. The list is endless. Coupled with that is the cost of the software, support and updates, on-going training, stationery and printing, bank charges, data storage and back-up, IT support and maintenance, holiday and absence cover. No wonder more and more companies are choosing to outsource their payroll to a reputable company!
Other factors that lead to a more efficient solution in the overall business structure include the stress factors –
- knowing that your payroll will be calculated correctly and efficiently regardless of everyday business activities and availability of key personnel,
- No need to worry about keeping up to date with ever changing calculations, employer obligations and employee entitlements
- Implications of errors on overall business efficiencies
- Additional resources available to meet the changing needs of business without the need for investment or capital outlay
- Integration with other business functions such as HR and Nominal ledger interface
- Risk mitigation in the event of power or system failure, loss of key personnel
- Secure and confidential data transfer, processing and storage
- Independent processing facility for control and compliance purposes
- Transparent costing structure – no hidden surprises; pay per use cost structure.
Peace of mind comes from knowing that the right people are taking care of your most valuable assets and working in your best interests in managing your biggest costs. Payroll is one of the biggest costs in any business – it demands appropriate management. For further information about Paycheck Plus or to obtain a free quotation, phone 01 9059400 or visit www.paycheckplus.ie.