Payroll Outsourcing

Payroll Outsourcing | Bestar

Singapore Payroll Outsourcing Explained

Payroll outsourcing in Singapore is a popular choice for businesses of all sizes, from startups to large enterprises, due to the complex and evolving regulatory landscape. It offers numerous benefits, including cost savings, improved accuracy, enhanced compliance, and the ability for businesses to focus on their core activities.

Key Benefits of Payroll Outsourcing in Singapore:

• Cost Savings & Predictability: Outsourcing can significantly reduce overhead costs associated with in-house payroll, such as software licenses, IT maintenance, training, and dedicated payroll staff salaries.

  
  

• Error-Free Processing & Accuracy: Professional payroll specialists are equipped with the latest technology and expertise to ensure accurate salary calculations, tax deductions (including CPF, SHG contributions, and SDL), and compliance reports. This minimizes the risk of costly errors and penalties.

  
  

• Regulatory Compliance: Singapore's employment and tax laws (governed by MOM, CPF Board, and IRAS) are complex and frequently updated. Outsourcing ensures that your payroll remains compliant with the latest regulations, reducing the risk of fines and legal issues.

  
  

• Enhanced Data Security: Reputable payroll providers implement robust security measures, including data encryption and access controls, to protect sensitive employee information.

  
  

• Time Savings & Efficiency: Payroll processing is time-consuming. Outsourcing frees up internal HR and finance teams, allowing them to focus on strategic initiatives and core business functions.

  
  

• Scalability: Outsourced payroll services can easily scale up or down with your business growth, accommodating changes in employee headcount without requiring significant internal adjustments.

  
  

• Expert Advice: You gain access to a team of payroll experts with in-depth knowledge of Singaporean payroll legislation, providing valuable advice and support.

  
  

• Business Continuity: Payroll processing continues uninterrupted even in cases of internal staff absences or turnover.

  
  

Payroll Compliance Requirements in Singapore (as of 2025):

Employers in Singapore must adhere to various laws and regulations set by:

• Ministry of Manpower (MOM):

  
  

  • Salary Payment Deadlines: Salaries must be paid within 7 days after the end of the salary period. Overtime must be paid within 14 days.

    
    

  • Payslip Issuance: Employers must provide detailed itemized payslips (electronic or physical) with specific information like basic salary, allowances, deductions, CPF contributions, overtime hours, and net pay.

    
    

  • Employment Records: Employers must maintain payroll records for at least two years for current employees and one year for ex-employees (covering the last two years of employment).

    
    

• Central Provident Fund (CPF) Board:

  
  

  • Mandatory Contributions: Employers must make monthly CPF contributions for employees earning more than SGD 50 per month. Contribution rates vary based on age and salary level.

    
    

  • Submission Deadline: CPF contributions must be submitted by the 14th of the following month.

    
    

• Inland Revenue Authority of Singapore (IRAS):

  
  

  • Annual Tax Reporting (IR8A): Employers must file employee income details to IRAS by March 1st each year using Form IR8A and its appendices.

    
    

  • Auto-Inclusion Scheme (AIS): Mandatory for companies with 5 or more employees to file tax records electronically under AIS.

    
    

  • IR21 Tax Clearance: For foreign employees permanently leaving Singapore, employers must file Form IR21 at least one month before their departure and withhold any outstanding payments until tax clearance is obtained.

    
    

• Skills Development Levy (SDL): All employers must pay SDL, calculated at 0.25% of an employee's gross monthly salary (minimum SGD 2, maximum SGD 11.25 per employee per month).

  
  

• Self-Help Group (SHG) Contributions: Deductions for various SHG funds (CDAC, SINDA, MBMF, ECF) are also mandatory.

  
  

Cost of Payroll Outsourcing in Singapore:

The cost of payroll outsourcing varies depending on factors like the number of employees, the complexity of your payroll, and the range of services required. Generally, costs are quoted on a "per employee per month" basis, with initial setup fees.

• Small businesses (1-50 employees): SGD 8 -15 per employee per month.

• Medium businesses (51-200 employees): SGD 6 -12 per employee per month.

• Large businesses (more than 200 employees): SGD 5 -10 per employee per month.

Additional services like bank GIRO setup, IR8A/IR21 preparation, processing expense claims, and government-paid leave scheme applications may incur separate fees.

Common additional fees that Bestar in Singapore might charge beyond our basic "per employee per month" rate.

Here's a breakdown of fees for these services:

Initial Setup Fees

• Range: A one-off fee ranging from SGD 100 to SGD 500 per company.

• What it covers: This fee covers the initial onboarding process, setting up your company's payroll system in our software, configuring payroll policies, and migrating employee data. Bestar may waive or offer a lower setup fee if you sign up for a longer contract or a higher number of employees.

• Specific setups: This might also include a separate, smaller fee for specific registrations like:

  • CPF Submission Account registration: Around SGD 60 - SGD 100.

  • Registering to pay monthly CPF via GIRO: Around SGD 100 - SGD 300.

Bank GIRO Setup Fees

• Range: A one-time bank GIRO setup fee can range from SGD 100 to SGD 300 (or even up to SGD 500).

• What it covers: This fee is for setting up the direct debit authorization (GIRO) with your bank to facilitate automated salary payments to employees and statutory contributions (like CPF) directly from your company's bank account through the payroll provider's system.

• Note: While banks themselves generally don't charge for opening a GIRO account, Bestar charges for the administrative effort of setting up and managing this process on your behalf. Bestar might have an additional monthly fee for arranging salary payments via internet banking or cheque, ranging from SGD 200 to SGD 500 per month.

IR8A/IR21 Preparation Fees

• IR8A Preparation (Annual Tax Reporting for Employees):

  • Range: SGD 19 - SGD 150 per employee. Bestar includes this for free if you are on their monthly payroll service.

  • What it covers: Preparation and submission of Form IR8A and its appendices (Appendix 8A/8B) to IRAS. This is an annual requirement for employers to report employee income for tax purposes. Fees can vary if appendices (for benefits-in-kind) are required or if the company is not under the Auto-Inclusion Scheme (AIS).

    
    

• IR21 Preparation (Tax Clearance for Foreign Employees):

  • Range: SGD 60 - SGD 250 per employee per submission. Bestar offers this free with monthly payroll services.

  • What it covers: Preparation and filing of Form IR21 with IRAS when a foreign employee ceases employment, goes on overseas posting, or leaves Singapore for an extended period. This ensures their tax obligations are cleared before their departure.

Processing Expense Claims Fees

• Range: Can be charged on a "per employee per report" basis, for example, around SGD 8 per employee per report, or it might be included in higher-tier packages.

• What it covers: This service involves verifying, processing, and integrating employee expense claims into the payroll system for reimbursement.

Government-Paid Leave Scheme Applications Fees (e.g., GPML, GPPL, NS Pay)

• Range: SGD 60 - SGD 100 per application.

• What it covers: This involves assisting with the application for government reimbursements for various leave schemes, such as:

  • Government-Paid Maternity Leave (GPML)

  • Government-Paid Paternity Leave (GPPL)

  • Shared Parental Leave (SPL)

  • Childcare Leave (GPCL/ECL)

  • National Service (NS) Pay claims

  • Adoption Leave (AL)

Important Considerations:

• Minimum Fees: Bestar has a minimum monthly fee, especially for companies with very few employees.

• Service Level Agreements (SLAs): Understand what is guaranteed in terms of processing times and accuracy.

"Minimum Fees" as a crucial point for companies with very few employees when considering payroll outsourcing in Singapore

While Bestar quotes a "per employee per month" (PEPM) fee, we have a minimum monthly fee to ensure the service remains economically viable for us. This is because there's a baseline level of administrative effort, system usage, and compliance responsibility involved regardless of whether a company has 1 employee or 5 employees.

Minimum Monthly Fees for Payroll Outsourcing in Singapore:

Here's what you can expect:

• Range: The minimum monthly fee for payroll outsourcing in Singapore falls anywhere from SGD 40 to SGD 100 per month.

• Bestar quotes a PEPM rate (e.g., SGD 15/employee) but then specifies a minimum charge ("minimum SGD 75 per month").

  
  

• Bestar states a fixed minimum fee for a small number of employees, for example, "starting at SGD 40 a month for up to 5 employees."

Prominent Payroll Outsourcing Providers and Key Features in Singapore:

While Bestar Singapore is a well-known payroll outsourcing provider in Singapore, the market also features other leading companies with diverse strengths. When considering a provider, businesses often look for features such as:

• Global Reach and Robust Systems: Providers that are global leaders known for their robust systems and multi-country payroll solutions.

• APAC Expertise and In-Country Services: Those voted as leading HR service providers in APAC, offering 100% in-country services to ensure local compliance and support.

• Local Expertise: Homegrown Singaporean entities with extensive local expertise in the nuances of Singaporean employment and tax laws.

• Operational Efficiency and Compliance Focus: Providers that primarily focus on streamlining operations and ensuring strict compliance with all local regulations.

• Flexible and Comprehensive Solutions: Companies offering flexible pricing models and comprehensive packages tailored to different business needs.

• Integrated HR and Payroll Services: Providers that offer a wide range of HR and payroll services, sometimes as part of a broader human capital management suite.

• Scalability: Services that can easily scale to accommodate changes in employee headcount, from small businesses to large enterprises.

• User-Friendly Platforms: Providers offering easy-to-use platforms that automate salary computation and statutory submissions, simplifying the payroll process.

• Integrated Management Systems: Solutions that integrate payroll with other HR functions like leave and attendance management for a unified approach.

• Full Suite of Services: Providers offering a complete suite of payroll and HR services to manage the entire employee lifecycle.

• Regional Specialization: Companies specializing in comprehensive HR and payroll solutions specifically for the Asia-Pacific region.

  
  

When choosing a provider, it's crucial to assess your specific business needs, compare pricing models, check their regulatory expertise and track record, evaluate customer support, and ideally request a demo of their platform.

How Bestar can Help

Bestar in Singapore offers a comprehensive suite of services that significantly benefit businesses by taking over the complex and time-consuming task of managing employee compensation and related statutory obligations. Here's a breakdown of how we can help:

1. Ensures Regulatory Compliance and Reduces Risk

• Expert Knowledge: Bestar possesses in-depth, up-to-date knowledge of Singapore's constantly evolving employment laws, tax regulations (IRAS), CPF Board rules, and Ministry of Manpower (MOM) requirements.

• Accurate Calculations & Submissions: We ensure precise calculation of salaries, CPF contributions (employer and employee portions), Skills Development Levy (SDL), and other statutory deductions (like SHG contributions). We also handle timely and accurate submission of these contributions to the respective government bodies.

• Annual Tax Filings (IR8A/IR21): Bestar manages the preparation and submission of annual income tax forms for all employees (IR8A) and tax clearance for foreign employees leaving Singapore (IR21), reducing the risk of penalties from incorrect or late filings.

• Audit Support: In case of audits by government agencies, Bestar can assist by providing accurate and well-organized payroll records.

• Mitigates Penalties: By ensuring compliance, we help businesses avoid costly fines, penalties, and legal issues that can arise from payroll errors or non-compliance.

2. Saves Time and Increases Efficiency

• Frees Up Internal Resources: Payroll processing is labor-intensive and time-consuming. Outsourcing frees up your HR, finance, or administrative staff from these routine tasks, allowing them to focus on core business activities, strategic initiatives, and revenue-generating functions.

• Automated Processes: Bestar leverages advanced payroll software and automation tools to streamline calculations, payslip generation, and reporting, which is significantly faster and more efficient than manual processes.

• Reduced Administrative Burden: We handle tasks like payslip distribution (via secure online portals), maintaining accurate employee records, and managing various payroll-related documents.

3. Delivers Cost Savings

• Reduces Overhead: Eliminates the need to hire dedicated in-house payroll staff, invest in expensive payroll software licenses, and incur costs for training, updates, and IT maintenance.

• Prevents Costly Errors: By ensuring accuracy, outsourcing minimizes financial losses due to overpayments, miscalculations, or penalties for non-compliance.

• Predictable Costs: Payroll outsourcing typically involves a predictable "per employee per month" fee, making it easier to budget and manage expenses compared to the fluctuating costs of in-house payroll.

4. Enhances Accuracy

• Specialized Expertise: Payroll is our core business. We employ specialists who are highly skilled and experienced in payroll processing, reducing the likelihood of human errors.

• Automated Checks: Modern payroll systems used by Bestar have built-in validation checks and automation that minimize manual data entry errors.

5. Improves Data Security and Confidentiality

• Robust Security Measures: Bestar invests heavily in state-of-the-art security infrastructure, including data encryption, secure cloud storage, multi-factor authentication, and strict access controls, to protect sensitive employee personal and financial information.

• Maintains Confidentiality: Outsourcing payroll ensures that sensitive salary information is handled by an external, neutral party, reducing the risk of internal breaches or morale issues related to salary transparency within your organization.

6. Offers Scalability and Flexibility

• Adapts to Growth: As your business grows and your employee count fluctuates (e.g., during peak seasons or expansion), Bestar can easily scale our services up or down to match your needs without requiring you to hire more internal staff or upgrade your systems.

• Supports Expansion: For businesses looking to expand regionally or globally, a provider with multi-country capabilities can streamline payroll across different jurisdictions.

7. Provides Access to Latest Technology and Insights

• Advanced Software: You gain access to sophisticated payroll software and technologies without the upfront investment. Bestar offers employee self-service portals for viewing payslips, applying for leave, and submitting claims, enhancing the employee experience.

• Reporting and Analytics: Bestar can generate various payroll reports, offering insights into labor costs, overtime, and other metrics that can support better HR and financial decision-making.

In essence, Bestar acts as an extended arm of your business, handling all the intricacies of payroll management so you can concentrate on your core competencies and strategic growth, all while ensuring compliance and accuracy.

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