One of the biggest challenges for businesses that employ casual and on-hired workers is payroll. Despite its simple objective – pay workers the right amount at the right time – payroll can be a costly and complex function, particularly if your business depends on casual workers and/or relies on a large on-hired workforce.
Knowing the risks
The challenges associated with payroll cannot be underestimated. Even large multinationals make costly mistakes. In 2017, PricewaterhouseCoopers (PwC) reported that Australia’s top employers identified payroll errors, which on average exceeded $4.4 million per employer. According to PwC, the three inherent risks associated with payroll include:
- Risk of fraud
- Risk of under or overpaying employees
- Risk of underpaying authorities
In addition to having a secure and reliable payroll process in place, businesses also need to ensure that they’re compliant with changes in legislation, which can be very difficult given how regular those changes can be. There are numerous laws, taxes and other statutory requirements that businesses need to comply with in order to effectively process payroll, including:
- Taxation Law
- Fair Work Act
- Modern Awards
- Superannuation
- Payroll Tax
Failure to process payroll correctly and on time doesn’t just pose financial and legal risks, it can also risk a business’s reputation. A business that fails to correctly process its payroll, its biggest expense, is likely to gain a reputation among as poorly managed, unreliable and untrustworthy.
Benefits of outsourcing
The importance of payroll demands that significant resources to be committed to it, even for small businesses. It can be a very timely and costly process, especially when you have to consider regular changes to taxation and employment law. Payroll, especially for businesses with an on-hired workforce, is a function that’s often best outsourced.
Outsourcing payroll to a third party means a business can commit more time and resources to core business activities. It also ensures that it can gain access to a team of experts that are better suited to integrating changes in legislation into the payroll process. Finally, by using a third party a business can both reduce cost and the inherent risks associated with payroll.
Bayside Group provides flexible employment and payroll solutions to leading business throughout Australia. If you would like to discuss these solutions, or any of the many others we provide, contact us today.
