How To Outsource Payroll To Third Parties

Outsourcing payroll is becoming a popular move for growing businesses who are innovative and forward-thinking. The in-house management of payroll and HRMS systems can lead to inaccuracies and excessive workloads during peak periods which means switching to a more advanced system or outsourcing payroll to a third-party specialist often improves productivity and profitability. Payroll outsourcing gives you complete peace of mind and ensures your business remains up to date with compliance which frees up your energy for more important tasks. Even though it’s a no brainer, taking the plunge and making the change can be difficult so continue reading to get advice on how to outsource payroll and the typical benefits you will see.

How to Shortlist Reputable Companies

Experience is key when it comes to how to outsource payroll. The complexity of Australian payroll and data privacy means that choosing an experienced company is essential. Experts with experience will give you peace of mind knowing that they have gathered years of involvement and practical understanding. Asking fellow business owners and friends is a good starting point before you even begin the research process. Information from trusted associates will be unsolicited, useful and will help you sound a starting point for your exploration.

Once you have a few reputable companies in mind you’ll need to find out as much information about them as possible. Creating a list of questions that you want to ask when you call to enquire will help to focus your conversations. The next step is sourcing fee proposals. Once you have a few to hand, you should use them comparatively and look closely at the breakdown of the cost and what other features are included; the proposal must align with the business plan – can it keep up with your proposed growth? Once you’ve shortlisted be sure to ask for references, this will help you make your vital, final decision. References from previous clients will give you more in-depth information about the service they provide because, as we know, people tend to make promises they can’t keep.

Ask The Right Questions

Asking payroll questions is the best way to get the specific information that you need. Don’t rely on the company to share it, ask for it! The last thing you want is to find out that the system you’ve chosen doesn’t quite fit with your company after you’ve already paid for it so gathering as much information in the early stages is integral. Does your system provide additional HR features as standard? Not all payroll systems offer basic payroll services. There’s an option for you to buy additional features (although some of these features come as standard) that can help with the effective management of your employees, including attendance management and report generation. You can extract data easily with most of the systems on the market which makes analysis to inform progression easier. Some features also include contract templates for employees that comply with current legislation and law.

With this in mind, it’s definitely worth exploring what additional features are on offer that can help towards the effective running of your business when considering how to outsource payroll. With all the sensitive information that your chosen company will receive you will need to ask the following question; What are your security processes? In the age of online hacking, cybersecurity is paramount and your chosen company should share this mentality. Your employee’s personal data such as names, addresses, tax file numbers and bank account details will be shared so it’s essential that you trust the supplier. GDPR privacy laws have also been enforced in the EU to prevent such crimes being committed so check that they comply with this law and that their processes reflect the current legislation if any information may be shared that belongs to an EU resident.

Create And Share The Process

Now that you’ve researched, scrutinised, compared fee proposals and carefully selected a credible corporation and entrusted them with your payroll there’s one more significant step to complete. You’ll need to set up a flawless process and share it openly with your team. You may need to change the course of action for timesheet collection or create new induction packs for casual employees. Even if you have to make a lot of changes, that’s ok- just make sure they are clearly communicated with your staff with a rationale as to why you’ve made these changes. Staff will be more likely to be on board with change if they understand why it’s occurring. Processes for accessing employment contracts and personal information such as salaries, working conditions and benefits should also be shared so they are easily accessible for both the employee and the payroll company.


Hopefully, after reading this article the idea of how to outsource payroll will not seem as daunting. With so many benefits to handing over this area of work, why would you continue to use your in-house payroll system and run the risk of failing to comply with new legislation? Switch to an outsourced payroll system today and gain the peace of mind that you deserve for your business and your employees.

Check out our master guide with further resources about payroll outsourcing here!