Payroll outsourcing is a specialized business process in which a Company contracts its payroll processing to an outside outfit which then owns, manages and administers the process based on pre-defined and measurable performance criteria. In effect you tap into the provider’s knowledge, experience and creativity, which was previously unavailable to you.
Even the most meticulous and experienced professionals find that managing a payroll system can be a headache. Slap on a stiff penalty for a tax computation or filing omission, and now we’re talking a full-blown financially-induced migraine.
For many businesses, payroll services offer an attractive and valuable alternative to in-house processing. Chosen correctly, they provide a less expensive, simpler means of paying your employees, filing your taxes, and performing a host of other duties
A study conducted by the audit firm PricewaterhouseCoopers (PwC) established that outsourcing payroll functions costs about 30% the cost of running them in-house or even processing them through enterprise resource planning (ERP) system.
Therefore, a perfect solution to tackle this problem and getting things right for the first time, would be for SMEs to outsource their payroll to a third party business services provider.
How can Payroll Outsourcing benefit your company? As the scope of payroll expands, it has become increasingly more difficult for companies to keep up with these changes. More and more time is spent on payroll and away from the core activities of the business. By using a payroll outsourcing service, employers can focus on what they do best – running their business.
In addition to an increase in time allotment, a payroll outsourcing company helps to ensure the accuracy of the payroll process. As tax laws and computation change, it is the job of Payroll Outsourcing companies to stay on top of these changes.
Using a payroll outsourcing company eliminates the worry of reliability and security issues that may arise from running an in-house payroll department. Payroll outsourcing eliminates the possible risk of exposure of confidential information to unauthorized personnel, and provides a fast and easy way of managing payroll.
Although payroll is an important consideration, it is not a core activity for your business. However, payroll is a core activity for a payroll outsourcing company. And by employing the services of a payroll outsourcing company, you can concentrate on the core activities of your company while your payroll outsourcing company focuses on theirs.
Here is a snapshot of a sample of the key Payroll Outsourcing benefits:
Cost-savings: The Outsourcing fee you pay is a mere fraction of the cost of several full-time salaries and benefits, and such other associated costs as investments in payroll software, software upgrades and payroll training
Confidentiality: You are assured that your data is handled with absolute discretion and only designated officials are privy to the same. Hence, there is reduction in the risk of exposing confidential information to unauthorised personnel.
Data security: Your Payroll data is backed up on the Service Provider’s systems thus enhancing security against both loss and adulteration.
Pro-active partnership: By documenting service levels and defining the scope of the outsourcing agreement, you jointly create a dynamic environment of true partnership.
Quantifiable costs: The outsourcing cost is straightforward, quantifiable and predictable whereas the internal costs of payroll processing are often unknown and rarely monitored.
Flexibility: Being our own developed system, we shall be ideally positioned to customize the reports to your precise needs. In addition, the annual returns generated through our system are approved by the Kenya Revenue Authority under Approval reference number I.T./1037/2/2002/9 issued on August 23, 2002 (copy enclosed – Annex 4.5 – for your ease of reference). This no doubt gives you added confidence in the returns that we shall generate for you.
PEACE OF MIND: One less time-consuming compliance issue to worry about. Your payroll and payroll taxes are quickly and efficiently processed for you. Penalties are no longer a lingering nightmare for you. Tax penalties can be quite unnerving considering that there are a total of 4 different penalties that are currently stipulated under sections 37, 72 and 94 of the Income Tax Act.
Full administration of PAYE, NSSF, NHIF SACCO and Retirement Benefit reporting and lodgment processes
Lodgment of pleas for waivers or concessions, on your behalf, on matters Pre –Agreement albeit at mutually agreed one-off fees.
Interpretation and dissemination of pertinent legislative changes impacting on payroll
On-going incisive consultancy on your payroll and structures thereof with a view to attaining optimal structures within prevailing legislative provisions
The following instances will serve to illustrate the real tangible benefits that accrue to you when you sign up for the “Cool” premium payroll service option:
- A couple of years ago we proactively engaged KRA on a customer’s behalf and secured the waiver of KES 750,000 that would otherwise have been levied as computational and late payment penalties.
- We intervened on a customer’s behalf and secured a 70% rebate on the customer’s employees motor vehicle benefit such that instead of being taxed on the standard 2% of the original capital cost of the vehicles, we managed to get them taxed at 0.6%.
- We have also occasionally liaised with KRA to secure waiver of penalties for customers experiencing liquidity difficulties and are unable to settle their PAYE obligations on due dates.
- We redesigned a customer’s payroll system and completely eliminated the risks associated with handling cash in paying salaries.
Having your entire payroll operation undertaken by Cool Basics will make eminent financial sense, as well as offloading an ever-growing burden. Regardless of your payrolls’ size or complexity, our highly specialized staff are equipped to competently complete every aspect of the task.
Cool Basics will ensure that your Payroll processing and administration is completed in accordance with latest payroll legislation to your precise requirements, and timelines.