How Outsourcing Your Multi-Country Payroll to Mercans Creates Cost-Savings
Multi-country payroll outsourcing is the use of an external party to manage a company’s global payroll, including the calculation of salaries, managing taxes and employee benefits. Notably, businesses which maintain only an in-house team and who don’t utilize HR and Global payroll outsourcing companies for HR and payroll services spend 20% more on these operations than those that do retain HR and Global payroll outsourcing services companies.
Factors Affecting Payroll Cost
Your company’s payroll costs can be impacted by how often you issue payroll, how many employees you are paying, whether you are using direct deposit, if your team is in various locations, and the complexity of tax laws in those locations.
1. Payroll Frequency
Some payroll services charge based on individual payroll runs. Others include unlimited payroll runs. For individual runs, be mindful that frequent payroll runs can be costly. Remember that paying semi-monthly can be more complicated to administer because each pay period will have a different number of days.
2. Payroll Head Count
Payroll processing services typically charge a per-employee monthly fee in addition to the basic subscription cost. And a volume discount can reduce the cost of per-employee fees.
3. Direct Deposit Use
Fees for payroll services typically include direct deposit to employee bank accounts. This eliminates the cost of replacing paper checks that can get lost — and ensures pay always reaches employees on time. Using a payroll service that includes direct deposit can also save money compared to managing it internally.
4. Dispersed Teams
Payroll processing is likely to cost more if you have employees in multiple locations resulting in more complex accounting. Having workers in multiple tax jurisdictions will also likely have implications beyond payroll. For example, local and state taxes are often withheld for the state where an employee performed work, requiring businesses to register with each state revenue agency where they do business.
5. Tax Complexity
Employers typically make payroll contributions on behalf of employees for local, state and federal taxes. For permanent employees, businesses pay the employer’s share of Social Security and Medicare taxes, accounting for 7.65% of wages. Employers also pay into Federal and state unemployment taxes. But these tax rates are in frequent flux and must be constantly updated in a payroll system.
Types of payroll outsourcing
There are several types of payroll services and service providers:
- In-House Payroll
Some companies oversee payroll in-house, which takes a lot of time, expertise, and staff. And in-house payroll poses risks, especially regulatory and tax related. Due to these complexities, companies that do manage payroll in-house tend to be large, employing thousands.
- Tax and Bookkeeping Professionals
While not their focus, some bookkeeping and accounting firms manage client payrolls.
- DIY Payroll
Online software allows companies to do payroll themselves. And there are several popular DIY payroll services. While DIY is a good option for some, the downside risks include human error, failure to comply with tax and labor laws, and lack of access to expert guidance. Company leadership, therefore, must fully understand the responsibilities and risks of conducting payroll in-house before rejecting the advantages of outsourcing.
- Small Payroll Bureaus
Small payroll bureaus provide more personalized service than larger payroll companies, however, many lack industry connections, and lack up-to-date technology.
- Small Business Payroll Specialists
Small business payroll specialists utilize innovative technology and expert staff to help many clients, while also offering personalized service and strong connections.
- Mid-Sized Business Payroll Providers
As employee numbers of growing companies expand, they need a payroll provider capable of handling increasingly larger amounts of detail and data. Sometimes, small companies that expand to medium size, purchase payroll services from a larger provider, and often struggle to use all the services they purchased. It may, therefore, still make sense to go with a small business payroll specialist provider until you’ve grown large enough to utilize all the services they offer.
- Big-Box Payroll Providers
As your company grows, you are likely to lose personalized services while you move into a one-size-fits-all environment. Bix-box payroll providers tend to offer many features – and their workforce and the technology serve larger enterprises. And their technology usually integrates with about anything you need.
- Fully Managed Payroll Providers
Fully Managed Payroll Providers completely manage all payroll requirements – from the first data entry to tax submissions and payment completions. This is a stress-free management solution with no onsite software, and no internal payroll department — just a complete outsourced payroll service providing you all the benefits of a payroll department without the overhead or responsibility.
- Proprietary Payroll Software
Payroll software automates all steps in the payroll process, helping companies manage employee payments with direct deposits, payroll tax withholdings, and accurate record-keeping.
In 2020, the IRS assessed more than $4.9 billion in penalties for payroll-related failures.
Some payroll software is focused on small and medium-sized business and a features direct deposit. Other payroll software focuses on extracting data including information on corporate wages, taxes, and turnover. Some focus on integration with tax-related software. While others focus on customer service, price point with small business in mind, fast-growth companies, and more.
Mercans focuses on international companies operating in multiple jurisdictions and utilizes a cloud-based proprietary software. This software is called HR Blizz and it automates global payroll processes and centralizes international employee’s data — enabling payroll processing across countries, languages, and currencies, while streamlining payroll processes securely and in compliance with local labor laws.
Calculating Payroll Costs FAQs
- How to Calculate Hourly Payroll?
For hourly employees, collecting time records is the first step. Time sheets and sometimes time clocks are used to create time records to submit payroll. Time records for each pay period are then reviewed and submitted to a bookkeeper or payroll processing company. With time records in hand, payroll can be calculated.
- How to Calculate Salaried Payroll?
For a salaried employee, all you need to know is base salary, number of pay periods annually, and frequency of pay (e.g., weekly, bi-weekly, bi-monthly).
- How to Calculate Employment Taxes?
After hourly wages, salaries and/or bonuses are paid, taxes for each employee must be paid. Typically, employment taxes are paid to Social Security/FICA, Unemployment/FUTA, Medicare, and Workman’s Compensation — by applying the current rate for each to deductions made to each employee’s pay.
- What About Benefits?
Companies provide benefits on a discretionary basis and sometimes offer them to attract and retain quality employees. A typical benefit package for a salaried employee includes life, health, and dental insurance, and may also include disability insurance, dependent care, tuition assistance, and retirement plans. Benefits packages typically cost between 25-40% of an employee’s salary.
- How much does Mercans charge to process your payroll?
Because Mercans does not use any subcontractors to deliver payroll services, we ensure that your employees and staff receive the highest quality support with the lowest possible fees. Our payroll outsourcing fees are transparent and competitive – you will save 30-50% over the service fees of any other comparative payroll outsourcing provider.
How does Mercans calculate payroll cost?
Mercans deploys cost saving strategies to calculate payroll and reduce costs. Because we are not an aggregator, we deliver services directly to you, with no intermediaries or subcontractors. Our global payroll suite, HR Blizz, enables local tax calculations in 160 countries, permitting savings to companies when complex payroll calculations are conducted. All payroll calculations, from currency to tax, are consolidated in seconds. And our payroll outsourcing software is easily integrated with any global HRMS systems. Altogether this turn-key service manages complex payroll at reduced costs to our clients.
Mercans Helps Implement Successful Global Payroll Systems
When you’ve decided to switch payroll systems – it’s important for your company to see this chance as an opportunity to evaluate your current system and identify areas where you can streamline processes. We’ve created a guide to help you navigate the process so you can achieve payroll peace of mind and cost savings. Learn more about implementation here. (Link – here)
Let Mercans Help You Consolidate Payroll and Reduce Costs
Free up staff and achieve cost savings
Mercans helps companies free up internal HR staff and save money while ensuring risk-free and compliant global payroll. We are a Single Service Provider with no intermediaries, offering global coverage and support with no delays. We provide a local presence for compliance purposes and ensure our clients suffer no fines or data breaches. Importantly, we help client companies achieve up to 50% cost savings through partnering with us.
Apart from cost savings to the HR department, Mercans also reduces costs to other departments via automation, including Internal audit resources, Treasury resources (responsible for managing bank files), Finance resources (responsible for reconciliation between HR & Finance data), and Managers (required to approve leave, monitor timesheets of sub-ordinates, etc.).
Reduce Costs for Payments to Employees, Wherever They Might Be
Mercans utilizes Hyperwallet as a major feature of a full offering of payment options in support of HR Blizz, our multi-country payroll offering. Hyperwallet is a Software as a Service (SaaS) global payout platform enabling localized, multi-currency distribution anywhere in the world.
Importantly, SaaS eliminates the cost of software set up and follow-up updates, including the costs of the hardware required to operate it. Instead, SaaS provides the software at the cost of a regular subscription.
At present, our payout platform serves more than five million payees globally, processing more than $5 billion in payouts. Hyperwallet enables companies to make payments to employees or other payees — quickly, conveniently, and affordably. We utilize flexible payout options including local bank deposits, international wire transfers, brand-name prepaid and virtual cards, custom checks, and cash withdrawal services. This allows workers and independent contractors to have more freedom and flexibility in their lives and careers.
Our clients seek to enable multiple currencies in their payroll payouts. As each country has distinct banking rules, ensuring compliance with a variety of rules takes time and effort. With Mercans, companies no longer need to generate bank files for uploaded to their bank portal to achieve payroll approval. Payment files in Mercans now automatically go to Hyperwallet, with payments released upon approval, in real-time, across any time zone. This Hyperwallet integration further strengthens Mercans’ ability to support payouts in more than one hundred currencies, reducing payroll processing time from 3 days down to one day.
With Hyperwallet, employees can also add expenses in a currency and location they choose. As a result, Mercans has been able to continually reduce client transaction costs.
Automated Tax Filings
Mercans helps client companies automate their tax filings, while markedly reducing errors. It makes sense to outsource or automate these time often time-consuming processes.
Mercans is the industry leader in global payroll outsourcing. For more information or a discussion about how we might help your company streamline its global payroll management while reducing costs, please contact us at: +1.877.637.2267 or [email protected].