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Guide to Payroll Services
No matter how big a company is, its business owners must be able to properly manage their company’s payroll obligations. These obligations do not only mean that they must ensure their employees’ wages are accurately calculated and issued, but also ensure that all processes are completed in compliance with Hong Kong’s various employment regulations. Unfortunately, small business owners and entrepreneurs may not be able to dedicate the time and resources to make sure these tasks are handled responsibility. As such, payroll outsourcing services are a fantastic solution to this issue. In this article, we look to outline what payroll outsourcing services are and what people can expect from them.
What You Will Learn
- What is payroll and how is it performed in Hong Kong?
- What are payroll outsourcing services?
- How will payroll outsourcing services save you money?
- What you should look for in a payroll outsourcing service provider?
What is Payroll and How is it Performed in Hong Kong?
Payroll refers to the list of employees that receive compensation from their employer in return for the services rendered during their employment. From an accounting perspective, payroll refers to the total compensation that these employees are entitled to receive.
In Hong Kong, payroll management is typically performed on a monthly basis in accordance with the terms set in the employees employment contract. These terms often include the number of hours an employee has worked in a set period of time, their benefits and even payment arrangements. The payroll process thus involves an employer calculating the amount of remuneration each employee is entitled to and the subsequent deposit of this amount into their bank accounts. On average, a Hong Kong payroll process takes approximately one work week to complete and requires the utilisation of accurate and current payroll data.
An important aspect of the Hong Kong payroll process is that employers must adhere to their Mandatory Provident Fund (“MPF”) obligations. In Hong Kong, employees and their employers are required to make monthly contributions to the employee’s MPF scheme which is calculated as 5% of the employees’ relevant income, subject to relevant income levels and this is an essential part of the payroll process. If an employer does not adhere to their MPF obligations, the Mandatory Provident Fund Schemes Authority (“MPFA”) will impose a 5% surcharge on default contributions and the surcharge received will go entirely to the employee’s MPF account. Defaulting on contributions is a criminal offence and can be incredibly costly for an employer
What are Payroll Outsourcing Services?
Payroll outsourcing services is the act of engaging a professional service provider to manage all aspects of a company’s payroll processes. These services have gained popularity in recent years as it allows all kinds of businesses, regardless of their size, to enjoy quality payroll services at a lower cost than if they were to handle these tasks in-house.
What is Included in Payroll Outsourcing Services?
A quality Hong Kong payroll service provider should be able to provide the following core payroll tasks:
- Payroll calculation
- Salary arrangement
- Employees’ expense reimbursement
- MPF contribution calculation for employer and employees
- Payslip creation and distribution
- Monthly payroll reports
How Will Payroll Outsourcing Services Save You Money?
For companies to experience sustainable growth, they must remain lean and efficient. Oftentimes, this requires a business to minimize the cost of managing their internal administrative tasks.
Outsourcing payroll processes to a professional service provider will free up human resources and accounting personnel. This allows them to focus their time and resources on more strategic tasks that could ultimately affect a company’s bottom line.
Because employers only need to make contact with their outsourced payroll specialists for the purpose of approving each payroll payment, repetitive tasks will no longer require a company to dedicate resources to.
Furthermore, professional service providers will typically have a thorough understanding of local employment laws and regulations. By outsourcing services to these individuals, you are lowering the risk of non-compliance when managing your employer obligations, and the penalties / fines associated with them.
What Should You Look for in a Payroll Outsourcing Service Provider?
Professional payroll outsourcing service providers, like FastLane HR, provide experience and expertise that guarantees their clients do not have to dedicate excessive resources to handle their administrative and HR tasks.
It is important for professional service providers to also utilize proper internal systems to encourage collaboration on these processes through the use of payroll accounting and HR systems. Use of these systems means that clients do not have to invest in these systems yet can experience full transparency and visibility on what processes are being completed on their behalf.
Furthermore, as previously mentioned, professional service providers must be knowledgeable of local employer obligations – in the case of Hong Kong, they must understand MPF regulations. FastLane HR can not only advise on these matters, but can also provide recommendations on what insurance policies to consider and can facilitate your company’s enrollment process in a qualified MPF scheme.