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How Outsourcing Payroll Can Save Time and Reduce Errors

Managing payroll is one of the most crucial yet time-intensive tasks for any small business. Every month ends proves to be a repetitive cycle for the payroll department into ensuring that your employees are paid the right amount and on time is essential for maintaining morale and compliance with tax regulations.

However, payroll management is full of complexities that can lead to errors, financial penalties, and wasted resources, which are precious for your small business in Sydney. That is why outsourcing payroll has become an increasingly viable solution this year.

The Cost of Payroll Errors

Payroll errors can be extremely costly for your small business, both financially and reputationally. According to the Australian Taxation Office (ATO), approximately one in four small businesses face penalties each year due to incorrect payroll reporting or underpayment of employees. Even minor errors, such as miscalculating superannuation contributions or underestimating PAYG withholding, can lead to fines and back payments.

Outsourcing payroll offloads these risks by leveraging the expertise of professionals who are well-versed in the latest compliance regulations like M.A.S Partners. Payroll providers invest heavily in software and training, ensuring every calculation adheres to Australian workplace laws and tax codes.

Time-Saving Benefits

The average small business owner spends approximately five hours per pay period managing payroll manually according to a Bloomberg Tax Report. This time includes calculating wages, processing superannuation, filing Single Touch Payroll (STP) reports and resolving payroll queries. Over the course of a year, this amounts to 260 hours or nearly seven weeks of full-time work.

Outsourcing payroll shifts this responsibility to a professional service provider, freeing up your invaluable time so you can focus on growth strategies, customer engagement or other critical functions. Modern payroll providers also offer cloud-based dashboards, allowing business owners to monitor payroll processes in real-time without micromanaging.

Reducing Compliance Risks

Australian payroll regulations are continuously evolving, making it difficult for small businesses to stay compliant. In 2024, new updates to the Fair Work Legislation Amendment require employers to enhance record-keeping and reporting of employee entitlements. Failing to comply could result in fines exceeding AUD 33,000 per breach for small businesses.

By outsourcing payroll, small businesses can benefit from the long-drawn expertise of specialists who stay ahead of these changes. It ensures accurate reporting and reduces the likelihood of disputes with the ATO or even your employees as well.

Cost-Effectiveness is Not Just for Large Companies

Many small business owners perceive payroll outsourcing as a costly endeavour reserved for large corporations. However, this is a misconception. After our thorough research, the cost of payroll outsourcing for a small business with fewer than 50 employees ranges between AUD 150 and AUD 300 per month, i.e. the average price is anywhere between AUD 5-10 per payslip per month.

When compared to the cost of in-house management—factoring in software subscriptions, employee training and the potential for financial penalties—outsourcing often proves more cost-effective. Additionally, outsourcing providers often bundle payroll with other services, such as BAS preparation and bookkeeping, further increasing value.

Technological Edge and Data Security

Payroll outsourcing firms use cutting-edge technology that small businesses might not be able to afford on their own. Advanced payroll software integrates seamlessly with accounting platforms, automating processes such as tax filing, leave accruals, and year-end summaries. Furthermore, these systems feature robust security protocols, including multi-factor authentication and data encryption systems intact at place, ensuring sensitive employee information is protected from breaches.

Recent findings from an Accenture report point out that 43% of cyberattacks target small businesses, with many incidents involving payroll data.

Outsourcing payroll today is a necessity for small businesses that are striving to operate efficiently in today’s competitive landscape. By reducing errors, you save time and ensure smoother compliance as well. This approach allows business owners like you to focus on what truly matters: growing their brand value and their businesses.

CTA for M.A.S. Partners

Why do the maths when you’ve got M.A.S.? Outsource your payroll today and count on us!

At M.A.S. Partners, we specialise in helping small businesses thrive with expert financial solutions for the past five decades. As Australia’s top accounting firm for small businesses, we offer customised payroll services that ensure accuracy, compliance and efficiency.

Let us handle the complexities of payroll while you focus on growing your business. Discover how our expertise in small business accounting in Sydney can make a difference. Partner with small business accountants who understand your unique needs, Contact M.A.S. Partners today!