Key criteria for choosing a payroll outsourcing provider

Payroll services for businesses are being chosen by companies because of the many advantages that this service brings. Many people wonder How does payroll outsourcing work? What license is needed to be able to perform payroll services for businesses?

Managing salaries for a business is a complicated job, requiring accuracy and compliance with legal regulations. Therefore, providing payroll services is not simply a financial operation but must also fully meet legal conditions.

1. Types of payroll outsourcing services

Payroll services will also include labor-related services such as periodic labor reporting and reporting to departments and agencies.
The payroll process is an important process for any business as it involves sensitive financial information and can lead to legal consequences if not handled properly. By using a payroll service provider, a company can reduce the administrative burden and minimize the risk of errors.

Some payroll services also offer additional features such as time tracking and employee self-service portals for accessing payslips.

The payroll process begins with collecting employee data, such as name, address, social security number, compensation, and other relevant information. This information is used to calculate taxes, such as personal income tax, unemployment insurance.

The payroll service provider will also handle the calculation of tax withholding, health insurance, and other benefits. They will then prepare payslips and process the payment of wages to employees.

The payroll service provider is responsible for ensuring that taxes are calculated and withheld correctly, and that tax forms are filed on time. This includes preparing and filing required forms, reporting tax liability, employee earnings, and tax withholding. The payroll service provider will handle tax payments to relevant government agencies, including filing taxes as well as unemployment insurance.

Key criteria for choosing a payroll outsourcing provider

2. How does payroll outsourcing work?

According to Decision 27/2018/QD-TTg, promulgating the system of economic sectors in Vietnam, payroll services belong to the code 781 of administrative activities and support services. According to Article 7 of the 2020 Investment Law, the provisions on conditional business are as follows:

A conditional investment and business sector is a sector in which the implementation of investment and business activities in that sector must meet necessary conditions for reasons of national defense, security, social order and safety, social ethics, and public health.

The list of conditional investment and business sectors is specified in Appendix IV of the 2020 Investment Law.

According to Appendix IV of the 2020 Investment Law, accounting services are one of the conditional business sectors.

Payroll services are also known as "C&B Services" or "Payroll Services". This is a payroll service that supports businesses in managing the payment of salaries, bonuses, insurance, taxes, and deductions of employees.

Payroll services for businesses are classified as accounting services. Therefore, payroll services are a conditional business line.
 

Which businesses benefit the most from payroll outsourcing?

3. Key criteria for choosing a payroll outsourcing provider

Businesses wishing to provide payroll services must meet the following criteria on business conditions and licenses. According to Article 14 of Decree 23/2021/ND-CP, here are the following conditions and key criteria for choosing a payroll outsourcing provider:

- Having a location for the head office or branch to organize employment service activities owned by the business or leased by the business under a contract of 03 years (36 months) or more.
- The business has deposited 300,000,000 VND (Three hundred million VND).
- The legal representative of the business providing employment service activities must ensure the following conditions:

• Being a business manager according to the provisions of the Law on Enterprises.
• Not falling into one of the following cases: being prosecuted for criminal liability, being detained, serving a prison sentence, serving an administrative measure at a compulsory drug rehabilitation facility, a compulsory education facility, fleeing from the place of residence, having limited or lost civil capacity, having difficulty in cognition, controlling behavior, being prohibited by the Court from holding a position, practicing a profession or doing work related to employment services;
• Having a university degree or higher or having directly worked as a specialist or manager of employment services or labor supply for at least 02 years (24 months) or more within the 05 consecutive years before applying for a license.

Thus, enterprises wishing to conduct payroll services must meet 03 conditions regarding head office location, depositing 300 million and having a legal representative.

Optimizing your payroll process requires a lot of effort and resources. If you are looking for another way to achieve success while still being able to focus on your core business, consider payroll services. Most payroll processes can be outsourced, from tax preparation to all the admin work, so this is a time-saving and cost-effective option for businesses of all sizes. If you are curious about which businesses benefit the most from payroll outsourcing, contact us now for immediate assistance.

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