Payroll outsourcing services, combined with automated payroll software, optimize costs and streamline operations for businesses. These services handle 100% of payroll accounting tasks efficiently.

Introduction to Payroll Outsourcing Service

What makes payroll outsourcing services increasingly trusted by businesses? First, let’s explore the concept of payroll outsourcing with terra!

What is Payroll Outsourcing?

Payroll outsourcing services are an optimal solution that relieves businesses from the burden of payroll management, enabling them to focus on core activities. By delegating payroll tasks to outsourced payroll services, companies receive comprehensive support, including accurate payroll calculations, personal income tax (PIT) finalization, social insurance management, and regular updates on legal regulations. This approach not only saves time but also minimizes errors during payroll processing.

Key Features of Payroll Outsourcing Service

• Payroll Calculation: Ensures accurate and timely application of wage, bonus, and allowance policies.
• Insurance Management:Handles the registration, adjustment, and storage of social, health, and unemployment insurance.
• PIT Finalization: Completes all procedures for individual income tax declarations and payments for employees and businesses.
• Regulation Updates: Keeps businesses informed of new labor laws and adjusts payroll processes accordingly.

Comparison: In-house Payroll vs. Outsourced Payroll Services

Why More Businesses Are Turning to Payroll Outsourcing Services

Businesses are increasingly shifting from in-house payroll management to payroll outsourcing for several reasons:

• Cost Savings: Outsourcing helps businesses significantly reduce fixed costs by eliminating the need for infrastructure, software, or equipment investments for internal payroll departments. 
• Focus on Core Operations: By dedicating all resources to core business activities, companies improve competitiveness and overall operational efficiency.
• Flexibility and Adaptability: Outsourced payroll services allow businesses to easily adjust service scales to meet demand without additional investment in personnel or infrastructure. This is especially beneficial during fluctuating business conditions.

Payroll Services

Payroll plays a crucial role in a company’s operations, directly impacting employee satisfaction and compliance with legal regulations. 

What is Payroll?

Payroll refers to the process of calculating, recording, and managing employee wages and salaries within a company. In large and specialized companies, such as construction, real estate, and logistics, payroll accounting is not just a matter of simple calculations but also requires a deep understanding of labor laws and industry-specific compensation policies.

Payroll plays a significant role in managing company costs

It goes beyond merely calculating and distributing wages; it is involved in multiple areas, including:

• Planning labor costs: Estimating costs based on employee numbers, salaries, and benefits, and comparing with actual expenses for adjustments when necessary.
• Cost control: Ensuring accurate disbursements, detecting errors, and suggesting cost-saving measures.
• Providing decision-making information: Offering detailed reports and analysis to assist management in evaluating efficiency and making informed decisions.
• Ensuring legal compliance: Keeping up-to-date with labor regulations and taxes to avoid legal risks for the company.
• Supporting other departments: Providing information to the HR department for policy development and assisting the finance department in preparing financial reports.

Outsourced Payroll Services for Companies

Outsourcing payroll services not only helps companies optimize management processes but also offers numerous practical benefits. Here are some of the key advantages of outsourcing payroll:

• Time and cost savings: This service reduces the workload of HR departments, allowing them to focus on other important tasks. Businesses save on recruiting and training in-house payroll staff, reducing operating costs.
• Increased accuracy:Using professional payroll software ensures precision in calculating salaries, allowances, and other deductions, minimizing errors in the process.
• Reduced legal risks: Service providers stay updated with the latest labor and tax regulations, ensuring businesses remain compliant and reducing the likelihood of legal issues.

Typical Payroll Process

The payroll process is a critical component of human resource management in any company. To ensure accuracy and transparency in employee compensation, this process generally includes the following seven steps:

Step 1: Gather Payroll Information

Start by collecting all relevant information, including attendance records. For specialized positions, such as sales staff, salaries may be based on production results or KPIs, so the base salary must be determined accurately.

Step 2: Verification and Confirmation

Compare and verify data from multiple sources, such as attendance and sales records, to ensure accuracy. If discrepancies are found, the manager should intervene immediately to maintain the integrity of the process.

Step 3: Prepare Payroll Calculation

The HR or administrative department prepares the payroll using data on work hours, completed tasks, and KPIs to determine the wages, taxes, and social security contributions.

Step 4: Submit Payroll for Approval

Once the payroll calculation is complete, it is sent to the chief accountant and management for review. If there are disagreements, both departments collaborate to resolve the issues.

Step 5: Distribute Payslips

Once approved, payslips are delivered to employees via email or an internal system to ensure confidentiality.

Step 6: Process Payments

The finance department will allocate funds and process employee payments according to the established timeline.

Step 7: Record Keeping

Finally, all payroll data and documents are stored securely for future reference and reporting.

Challenges in Payroll Management

Several challenges can hinder payroll management, such as:

Difficulty in payroll management:

Frequent changes in personnel, such as hiring, training new employees, and role transitions, increase the workload for payroll accountants and make overtime calculations more complex. 

Legal compliance challenges:

Labor laws, social security regulations, and personal income tax laws are frequently amended, requiring businesses to stay updated to ensure compliance in salary calculations and payments. Regulations on minimum wages, salary coefficients, and insurance policies change periodically, necessitating timely adjustments to payroll systems.

Pressure from large volumes of data:

With a large number of employees, managing personal information and work history becomes complex, increasing the chances of errors. Payroll and deductions require high accuracy, and mistakes can lead to serious legal issues, such as tax penalties. Complex scenarios, such as sick leave, vacation days, or overtime, also need to be handled accurately to ensure employees' rights are protected.

Data security challenges:

Using basic software like Excel for payroll management without stringent security measures can lead to data leaks. This could result in unwanted incidents that affect company security and reputation.

Benefits of Using terra’s Payroll Services

terra offers a comprehensive suite of HR management solutions, including:

• terra HR System: A complete human resource management system.
• terra Payroll: Outsourced payroll services.
• terra Academy: A knowledge-sharing and free training platform.

By using terra Payroll services, clients can benefit from:

• Experienced professionals: terra has a team of experts who are highly knowledgeable about payroll processes and issues related to social security and taxes, ensuring all tasks are handled professionally. They also have experience working with tax authorities and social security agencies in various regions.
• Automated payroll processes: Advanced software and automation tools are used in payroll processing, optimizing workflows, enhancing accuracy, and reducing errors.
• 24/7 customer support: terra provides dedicated and timely consultation services to help clients with any payroll-related inquiries, ensuring you receive the necessary support.
• Affordable costs: terra offers flexible service packages suited to businesses of all sizes, helping clients select a service that meets their specific needs while keeping operational costs low without compromising on service quality.
• Comprehensive HR management: In addition to terra Payroll services, clients receive terra HR Systemwhich integrates HR data management with payroll processes, streamlining operations. 

Commitments of terra Payroll Services

When using terra Payroll, we commit to:

• Completing the entire payroll process, from salary calculation and tax deductions to timely employee payments.
• Saving time and effort for businesses by managing payroll processes and handling complex procedures.
• Ensuring accuracy and full compliance with legal regulations, helping companies avoid risks related to payroll and taxation.
• Providing consultation and addressing all inquiries so HR personnel can focus on other essential business activities.

Frequently Asked Questions (FAQ)

What does the payroll service include?

Payroll services cover income calculation, deductions, taxes, and allowances as per legal requirements; preparation and submission of tax reports (PIT, Social Insurance, and Health Insurance); and HR file management (employment contracts, attendance records, payroll documentation). Additional value-added services, such as salary policy consultation and labor issue resolution, can also be provided.

How long does the payroll process take?

The duration of a payroll cycle depends on the size and complexity of the business. For mid-sized enterprises, payroll is typically calculated at the end of the month, with payroll sheets finalized by the beginning of the following month.

How can I start using the service?

To get started, simply contact terra for a consultation. After signing a contract and providing necessary data such as employee information and attendance records, Terra will handle payroll calculations and payments on behalf of your business.

Is data confidentiality guaranteed?

Upon signing a contract, Terra guarantees confidentiality through a Non-Disclosure Agreement (NDA). All company information and data are securely protected and used solely for the agreed-upon purposes.

Other services offered by terra

In addition to HR management solutions, terra provides three year-end service packages:

• Labor Reporting Service: terra offers two flexible options: (1) conducting labor reporting on behalf of businesses and (2) offering labor reporting courses to guide businesses in completing the process independently.
• Personal Income Tax Finalization Service: terra prepares and submits monthly (or quarterly) PIT reports and completes the finalization of PIT on behalf of businesses.
• Consulting Service (terra Consultant): terra reviews payroll, provides legal consultation related to salaries, social insurance, and PIT regulations.