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Andi Refandi
Andi serves as a Senior Account Executive on Emerhub’s global team.
An outsourced payroll management can be very helpful for your business in Indonesia. Be it a startup, scale-up, or small-to-medium enterprise.
This article will explain when it is better to use a third-party professional service provider to manage payroll.
Common issues in payroll management in Indonesia
Outsourced payroll is the use of a third-party professional service provider to manage payroll. It includes providing services such as computing and distributing salaries, managing social security and health insurance, and computing and withholding taxes.
Most companies in Indonesia are either not large enough to need a dedicated in-house payroll team or they want to focus on their core business and outsource the supporting services. Below are the three major issues in in-house payroll management in Indonesia.
Administrative errors
Errors in payroll management can lead to serious penalties from the government and tax office. It includes misclassification of employees, bad time record-keeping, evading taxes, and missing payroll records.
Moreover, wrong payslip and late payments can lead to a strike or mass quitting of your best human resources. Since the 4th day of lateness, you can get a starting fine of 5% for every late day. They could also report your business to the Ministry of Manpower.
Failure to comply with the laws and regulations
Like any other country, businesses in Indonesia need to comply with the laws and regulations that apply. However, in Indonesia, the laws and regulations are ever-changing.
Due to that, in-house payroll managers have issues always complying with the current laws and regulations. It includes issues in maintaining compliance with the wages and employment taxes.
Failing to comply with local and national labor laws and relevant policies can badly impact your business. As a business owner, you will be responsible for all the fines and penalties that can occur.
Inexperienced payroll managers
The in-house payroll manager causes most errors in payroll management. Unlike an outsource payroll service provider in Indonesia, startups to SMEs tend only to have one staff member as the payroll manager. They do not hire extra team members to look over to have a good workflow.
It can cause overwork of the payroll manager, especially during payroll day. If the payroll manager is inexperienced, they will keep inputting inaccurate data with late delivery.
Of course, you can fire inexperienced staff. But, how many time-consuming interviews and training or costly trials and errors will it take until you find an experienced payroll manager?
Why do businesses in Indonesia outsource payroll?
Businesses outsource payroll services from a professional service provider to avoid the aforementioned issues. This is a simple solution that you can use for long-term benefits. The following benefits of outsourcing payroll become the main reasons why businesses prefer it.
Outsourced payroll provider saves money for your business in Indonesia
Outsourcing payroll can reduce your business’ monthly and annual costs. You will not need to spend your money on training in-house payroll employees, paying taxes for the payroll employees, and buying and updating the accounting software.
Outsourcing payroll reduces errors in payroll management in Indonesia
If you outsource payroll, professionals will handle everything related to payroll. You can be sure that salaries, taxes, benefits, and reports will be done accurately on time.
Correct salary payments will keep your human resources from raging. Accurate salary payments will also benefit your business as no employees will be overpaid, and there will be no bad reports from the Ministry of Manpower.
Outsourced payroll provider gives more time to focus on your core business in Indonesia
There will be more time to focus on your business by outsourcing payroll, especially if you handle payroll yourself.
There will be no time for you to waste by doing payroll or finding the right payroll manager. You will then have a more productive time growing your business and developing business strategies in Indonesia.
Guaranteed compliance with local laws in Indonesia
A professional service provider such as Emerhub not only has a team of professionals on payroll. We also have legal professionals who understand and update you on the constant changes in regulations related to payroll and labor.
Emerhub can guarantee that a professional payroll management here your business and payroll will be in compliance with the laws and regulations in Indonesia and each specific city.
Outsourcing makes you worry less about the payroll management of your business in Indonesia
Firstly, you will not worry if your payroll manager is taking emergency days off or sudden resignation. Secondly, you will not worry about payroll fraud and embezzlement. Last but not least, you will not worry about fines and penalties from payroll errors.
Outsourced payroll provider keeps data of your employees and business in Indonesia confidential
If you handle your payroll in-house, there will always remain a risk that some of the employees could get access to payroll information in the company’s server or that the payroll staff would reveal the salary information to others.
When outsourcing payroll management, however, your data will be kept in well-secured servers. Thus, there is no chance that someone from your company could find out these delicate details. This way, you will avoid the potential dramas that may occur in the office.
How to outsource payroll in Indonesia?
You can outsource payroll services from Emerhub by providing the following required documents:
- List of employee data – employee numbers, NPWP, employment status, marital status, position, grade (if any), and bank account details (number, name of bank, name of beneficiary)
- Payroll details – basic salary, monthly allowances, bonus, or incentives (if any)
- Certificate of social and health security – (BPJS Ketenagakerjaan dan Kesehatan)
- Temporary benefits list
- Allowances list (if any)
- Reimbursements list (if any)
- Loan deductions list (if any)
- Additional documents may be requested from us if needed.
If you have decided to outsource payroll in Indonesia or still ponder it, fill in the form below. Other than payroll services, we offer recruitment services if you want to hire in-house payroll experts. Emerhub’s professional consultants will gladly assist you in decision-making.
