Payroll Accounting Report: Outsourcing Benefits and Challenges

This report delves into the intricacies of payroll accounting, emphasizing the significance of outsourcing payroll services. It begins with an introduction to payroll accounting, encompassing gross salary, bonuses, taxes, and other compensation components. The report highlights the increasing complexity of payroll due to evolving regulations and the need for specialized expertise. It explores the services offered by companies like ADP, an American HR management company, and how these services contribute to company growth by reducing costs and enhancing accuracy. The report then contrasts outsourcing with in-house payroll management, considering factors like company structure and legal requirements. It presents the pros, such as expert guidance and cost-effectiveness, and cons, like potential fraud risks, of outsourcing. The report concludes by suggesting the value of offering payroll services, indicating the need for specialization in managing various companies simultaneously. References to relevant literature support the analysis.

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By student name
Professor
University
Date: 07 March 2018.
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Contents
Introduction.................................................................................................................................................3
Need for Outsourcing Payroll Accounting...................................................................................................3
Services Provided........................................................................................................................................3
How they help in growth of company.........................................................................................................4
Outsourcing vs inhouse management of the payroll function.....................................................................4
Pros and Cons..............................................................................................................................................4
Conclusion: Payroll professional services....................................................................................................5
References...................................................................................................................................................6
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Introduction
Payroll accounting deals with basically the accounting services with respect to the employees salaries. It
involves recording of all the compensation components in the books of the employer includeing Gross
Salary, bonuses, commissions, allowances, perquisites, taxes, wages, social security tax, insurance,
income tax, etc. It has become normal for the companies to get this outsourced to a different company
who is completely dedicated in providing such kind of services and has expert professionals in respect of
the same (Belton, 2017).
Need for Outsourcing Payroll Accounting
Offlate, payroll accounting has become very cumbersome and complex accounting area because of the
various new rules, regulations and laws coming every now and then in the various contries which needs
to be complied with. The same can only be complied if experts are doing the same or specialised training
is being given. Large companies can hire those having expertise in the field of human resource and those
having technology, but for the small and medium sized companies, it is not supposed to be fesible and
therefore they take the services of companies like ADP in payroll and Human resource accounting.
Services Provided
ADP is an American company providing human resource management services and softwares. It is listed
on S&P and NASDAQ and has a revenue of more than $ 11.7 Bn. It provides services to small, mid sized,
large as well as multinational companies. Its services include payroll management, tax compliance,
retirement plans, insurance plans, talent acquisition, time and attendance management, payment
solutions, etc (Alexander, 2016).
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How they help in growth of company
Companies like ADP relieve the regular workforce of the company from looking after payroll
management or even the company from maintaining a dedicated team for the same. This not only
reduces the cost for the company, but also increases the accuracy as well as the compliance by the
company. This help in cost cutting and thereby the growth of the company.
Outsourcing vs inhouse management of the payroll function
There have been constant debates on whether payroll services should be managed in-house or should
be outsourced. But it all depends on the complexity of the structure of the company and the laws of the
country in which the company is operating. In case, this needs professional and expertised approach, it
is convenient to outsource or else the regular payroll accounting activities can be managed by
conducting in house trainings (Choy, 2018).
Pros and Cons
The major pros of outsourcing the payroll accounting is that the company can be rest assured of the
work being done under the expert guidance and the internal control being strong in the area of
accounting systems. It also is beneficial in terms of cost cutting as the small and the mid sized
organizations would not be able to bear higher costs. The cons is that the company will not have internal
people working in the department and there can be chances of frauds. Furthermore, at times, it can be
costly too (Dichev, 2017).
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Conclusion: Payroll professional services
In case the degree is completed, I would like to offer the payroll services to the employers as this has
been one of the areas in demand and it needs specialization to manage a portfolio of different
companies at the same time.
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References
Alexander, F. (2016). The Changing Face of Accountability. The Journal of Higher Education, 71(4), 411-
431.
Belton, P. (2017). Competitive Strategy: Creating and Sustaining Superior Performance. London: Macat
International ltd. Retrieved from https://www.routledge.com/Competitive-Strategy-Creating-
and-Sustaining-Superior-Performance/Belton/p/book/9781912128808
Choy, Y. K. (2018). Cost-benefit Analysis, Values, Wellbeing and Ethics: An Indigenous Worldview
Analysis. Ecological Economics, 145. Retrieved from
https://doi.org/10.1016/j.ecolecon.2017.08.005
Dichev, I. (2017). On the conceptual foundations of financial reporting. Accounting and Business
Research, 47(6), 617-632. Retrieved from https://doi.org/10.1080/00014788.2017.1299620
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