¿What are the minimum specs that the OUTSOURCING (personnel administration) firm that provides me the service must have?

Payroll and personnel administration in companies, specifically regarding technical aspects, taxing, social security, and payroll, is getting more complicated, more likely to have mistaken, and very time consuming for key people; this is why an OUSTOURCING firm is getting to be very convenient to work with.

However, what are the minimum specs that as an owner, director, consultant or responsible, I should make sure in order to have the security of knowing that I’m working with a serious firm?

Through various experiences, documents, posts, laws, opinions, etc… I have gather the following 7 (seven) minimum specs that an OUTSOURCING firm must meet in order to have the certainty that we are working with serious people:

  1. The Outsourcing firm effectively pays IVA (VAT):

By far, the principal expenses in an Outsourcing firm are payrolls, taxes and social security fees, to which IVA (VAT) doesn’t apply. However, the firm does charge an important amount of IVA to its customers. Therefore, logically the Outsourcing firm should be paying important amounts of IVA to the SAT (Mexican’s IRS).

  1. Only one Company interaction:

The Outsourcing firm should the only company involved on the operation. This means that the Outsourcing firm is the one that invoices the service, the one that receives the payment, the one that has all the employees enrolled on it, the one that pays them, and the one that pays all the payroll taxes and social security fees. There should not be a third party company to which one or more of these activities get delegated.

  1. No alternation between companies during the life of the service or the Outsourcing firm itself:

The Outsourcing firm should prevail throughout the years, creating its age, and experience. The fact that the Outsourcing firm get dissolved and then a new one arise with no reason, its definitely a bad sign.

  1. Known and referred owners and/or CEOs:

It should be very clear who are the owners of the Outsourcing firm; and those owners must be well known, and have the preparation and knowledge of how to produce and keep safe the services that an Outsourcing firm must provide.

  1. Owners or CEO of the Outsourcing firm appearing in the Constitution Papers of the Company:

The people I’m talking in the previous paragraph must appear in the Company’s Constitution Papers, as owners and responsible of the company; and those Constitution Papers, should be reachable and showable to the customers.

  1. Complete Payroll tax and Social Security fee reporting:

The Outsourcing company must reveal all its taxes and social security payments to the customers in a regular basis.

  1. Concept used in the invoice to the customers:

The expressed concept in the invoice must be clearly related to the payroll and stated as “Personnel Administration”, even including the payroll period that correspond, area cost, and as much information needed to have it clear that we are invoicing a payroll.

There can more desirable specs that I would like to see in an Outsourcing firm. However, the 7 spec that I’m enlisting above, in my opinion, are NOT optional.

Between those “desirable” specs, I would add that the Outsourcing firm operates with proper order, and based on defined and controlled processes, in order to assure to its customers a daily payroll and tax calculation and payment processes without any problems or mistakes. This since the processes of these kind of firms contains too much and very important information (normally, payroll expense in companies represent 40% – 50% of the total cost), and if these processes are not based on an ordered process, chance of mistakes are high.

I consider that the service provided by the outsourcing firms, is, and will be more and more, very necessary for today’s companies. And by having these kind of firms that completely fulfill what is need to be giving a safe and high quality service, the collaboration between companies and Outsourcing firm will have GREAT outcomes.

C.P. y M.I. Luis A. Arratia Díaz