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Why Companies Should Outsource Their Payroll?

Why Companies Should Outsource Their Payroll?

Back-office activities, such as managing accounts, payroll and other financial responsibilities, are non-core functions within a company.  A non-core business function is neither being the central of a business nor a profit centre (meaning, the function costs are not charged to customers and the company recognized them as overheads).  Several long-term benefits from outsourcing non-core functions have been acknowledged by many professionals and business owners.

Time consuming

A company has to comply with a wide range of rules and regulations so as to meet the responsibilities as an employer for statutory purpose.  This recurring activity would consume the working hours and remove the focus away from the core activities.  Although it may not help to improve the business performance, payroll is one of the critical business functions.  If the function is not carried out properly, it could adversely affect the business in many areas, such as the company’s reputation and the employee morale.

Team of experts

Payroll processing requires sound knowledge on the complex rules and formulas, such as different CPF contributing rates for different age groups, pro-ration of an incomplete work month, encashment of annual leaves and work flow required for a leaving foreign employee.  The board has to ensure that the skills and knowledge of the human resources (HR) departmental staff are updated with the regular changes in the statutory requirements.  Otherwise, the management might also be involved to assist during audits.  The payroll agent will be accountable to reply auditors or statutory boards during audits and attend to employees if they are doubtful on the amounts received or taxed.

Cost savings

The regular payroll service fee is mostly lower than a full headcount cost (comprising basic wage, bonus, provident funds, costs of training and staff benefits).  In addition, software subscription fee or maintenance cost for desktop software could be excluded in your budget planning.  Payroll service packages, flexible to cater clients’ needs, are available from basic to complex payroll duties.  Typically, the professional payslips and computational reports, available in the basic package, are sufficient for internal purpose.  The payroll agent would also send out timely reminders to clients when there are upcoming events which need responses from the principal.  For instance, the request for additional information (outside payroll reports) to prepare the annual income statements (i.e. Form IR8A) is one of the such events.

Conclusion

The advantages of outsourcing payroll function to a professional third-party agency are inter-related.  From the reduction in the administrative inconvenience, risks of errors and involvement to the savings in time and money, the decision to outsource allows more time to focus on the business core.

Mighty Glory Corporate Solutions offers professional payroll and other affordable corporate-related services. Please feel free to contact us to get a better quote.

Cloud Accounting Or Traditional Off-The-Shelf Accounting Software Is More Suitable For Your Business?

Cloud Accounting Or Traditional Off-The-Shelf Accounting Software Is More Suitable For Your Business?

What is cloud accounting? Cloud accounting or traditional off-the-shelf (or desktop) accounting software is more suitable for your business?  

Having the right-chosen accounting resources greatly assist a corporation to fulfill its accounting purposes and objectives in a timely manner. With the constant improvements in technology, businesses have options to select, namely Cloud accounting or Off-the-Shelf computerized software. Today, let’s discuss about the benefits of Cloud Accounting compared to Off-the-Shelf software accounting.

Cloud Accounting Software

Cloud accounting software is largely similar to the traditional accounting software. But cloud accounting software is hosted on remote servers instead. Users access software applications through a cloud application service provider over their network in order to access real-time information and make changes instantly.  Beside other overheads, cloud accounting services are changed on a monthly basis, rather than one-off costs.  The monthly service fees are PIC claimable.

Cloud accounting services are getting more popular due to its many benefits, which include automatic version updates and initial installation, maintenance or backup are not required.  Businesses can switch to from the existing traditional system to cloud accounting without costly additions to the existing infrastructure.

With cloud accounting, users are able to access the same versions of software and data, even when they are located in different departments or branches. Achieving real-time reporting and visibility as well as greater collaboration capabilities even in remote areas through other means like tablets are also made easier.

Off-The-Shelf (or Desktop) Software

Off-the-Shelf softwares, on the other hand, are affordable to most SMEs and start-ups as they can be acquired and fully implemented at a low one-off cost. These softwares also come with a full range of features that every accountant requires to handle a simple or complicated set of accounts. Peace of mind and security can also be attained because support and maintenance contracts are provided.  Users can locate the closest service provider to resolve errors or problems, without the need of an internal IT team. However, the maintenance costs are not claimable under PIC scheme.  Additionally, off-the-shelf softwares are slow to adapt to industry needs cannot be discounted.  Extra fees are chargeable for a newer version or slight customization to better suit your needs.

Conclusion

Both cloud accounting software and off-the-shelf software have their respective benefits as well as detriments. The surge of companies switching to cloud accounting in recent dates however, reveals a trend to users still deciding between the two. When it comes to easy access, there is no deny that cloud accounting takes the lead.

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Five Reasons To Keep Proper Accounting Records

Five Reasons To Keep Proper Accounting Records

Summary: Maintaining proper accounting records is tedious and time-consuming.  But accounting function is one of the most important tasks in business making. Accounts must be handled with care and diligence.  Why it is important to do so?

Purpose

The main reason of keeping accounting records in the first place is to monitor your business progress, pertaining to financial, operational aspects and more! The ability to know if you are on the right track or overly-invested, identify potential errors and mistakes will ensure your business growth in a smoother journey. If bookkeeping is not done well, information will be hard to extract from the existing records. This may affect your company’s efficiency.

Compliance

Every so often, you are required to submit different types of accounts-related reports to your local government authorities according to the regulations they have stated. The entity would face legal consequences if there is failure in doing timely submission or provision of inaccurate reports.  As a result, the corporation may suffer losses by arranging manpower to resolve the troubled issue and pay the penalties imposed.  This could have been avoided if compliance procedures and payments were done in a timely manner.

Tracking

Keeping proper accounting records also assists in protecting the directors’ own interests. If the business transactions, which implicate directors, have disputes, the accountant can investigate with accurate information and useful evidence with minimal fuss. Common business risk like unusual wastage or misusing of resources would be minimised or detected just in time to save the situations!

Funding

If additional funds are required for business expansion or investment on research and development, the company image in front of the potential investors would be increased if your company has an accurate and updated accounting system.  This would build up their trust in your corporation’s internal running procedures that the business practices are transparent. Keen investors are interested to know how their contributed funds will be invested and when they can witness the harvest. The same concept goes to bankers as well: Accurate and updated accounting information would facilitate the banks to analyse the company’s key performance indicators and likeliness of business risk.

Management

Advanced business planning needs the latest corporate performance results.  It is very risky to make critical decisions without the relevant information to back it up. With a better understanding on the entity’s current market position, appropriate decisions could be made in the current or near-future term.