What Does It Cost to Outsource Payroll? Understanding What You’re Paying and What You’re Buying
‘What does it cost to outsource payroll?’
When we are talking to new clients at AchieveCorp, this question is probably the one we hear most often. On some level, it’s not difficult to see why that is. We understand that our prospective clients shop around before choosing to work with us or opting to go with one of our competitors.
We also understand that payroll outsourcing cost is a significant consideration. As an independent contractor, outsourcing your payroll means sacrificing a certain (small percentage) of your invoices every week or month. Finding the company that isn’t going to hit you with a high rate definitely appeals, because it means you are making more money.
On another level, though, it’s important to recognise that payroll outsourcing cost is not everything. While you should ask ‘What does it cost to outsource payroll?’ before choosing a payroll management company, you also need to ask, ‘What am I paying for?’ Not all outsourced payroll management companies offer the same services, and not all are offered by a professional CPA Accounting firm. The services that are or are not available from different providers, meanwhile, should figure into your decision strongly.
Whether you are an independent IT contractor, or a small business or employment agency looking for a payroll management solution, AchieveCorp is the best place to start asking questions.
Salary Packaging: One Factor to Consider When Shopping for Payroll Management Services
One service you should pay close attention to when looking at payroll outsourcing companies is salary packaging. At AchieveCorp, we offer a flexible and comprehensive salary packaging service. This service is one of the top perks of choosing AchieveCorp. We are not limited by internal policy or locked into inflexible managed leases, but will include everything that is allowable under PSI legislation, which whichever lease provider you choose, without ever putting you at risk.
In Australia, salary packaging (or salary sacrifice) is an arrangement where you take some of your pre-tax income and use it to finance specific allowable items, services, or expenses. So long as the packaged items are ‘otherwise deductible’ expenses – meaning they are related to earning your income and would be tax deductible if you were to claim them in your tax return – they won’t attract Fringe Benefits Tax, but you will benefit from not having to pay the GST on these items. Vehicles are treated differently however and may be salary packaged even though they are generally used fully for private travel. Say you need to buy a car and want to do so in the smartest way possible for taxation and finance. Salary packaging allows you to use pre-tax earnings to pay for the vehicle and its running costs, which reduces your taxable income and puts more in your pocket. We will always advise you on your best option up front, with never any obligation or pressure to proceed.
Usually, salary packaging exists as an arrangement between an employee and an employer. If you get hired for a new job, you may well choose to negotiate for salary packaging. In addition to vehicles, you can ‘salary package’ other things as well, such as computers, childcare in certain circumstances, superannuation, living away from home allowance and reimbursements for professional expenses. Often, though, independent contractors don’t get to enjoy the benefits of salary packaging.
If you choose AchieveCorp, we will figure salary packaging into your outsourced payroll management services. If you buy a car, we can include the vehicle in your salary package, assist you in obtaining your novated lease finance and even provide you with a corporate credit card for all your fuel and vehicle expenses. Have two cars? No problem. With these perks, you maximise the dollars in your pocket while earning your excellent hourly rate from contracting, yet you are not tied into payrolling through your employment agency or starting your own company.
Payroll Outsourcing Cost: What You’ll Get from AchieveCorp
Salary packaging is just one of the above-and-beyond services we provide at AchieveCorp (a more comprehensive overview here). So, while you might sometimes pay more in payroll management outsourcing costs with us than you would with other budget companies—our rates typically land between 1.25% and 3.75%—you will get more, too. The bottom line is that you get what you pay for with outsourced payroll management services. Don’t just ask ‘What does it cost to outsource payroll?’ Ask what your money is paying for, too.