Why Outsourcing Payroll is a Good Idea for Your Business
As a business owner, one area of your business that you need to be functioning effectively and efficiently is your payroll. This is vital to your organisation and if executed poorly you may find yourself at risk of HMRC fines and penalties. Failure to pay employees correctly could result in disputes and even lawsuits.
Good payroll practice is paying staff wages and legal obligations accurately and on time. However, as a business owner it can be hard to manage priorities and payroll can often be neglected over profit and growth generating activities. Therefore, the most efficient solution is to always outsource your payroll to qualified payroll service providers.
What is payroll outsourcing and how does it work?
Outsourcing payroll essentially means you hire a company that specialises in outsourced payroll services. They should be able to manage all your payroll obligations, such as setting up new starter records, processing terminations, gross to net calculations, and filing all mandatory requirements to HMRC.
For this to be conducted you need to provide the payroll provider with your employees’ personal and job related information. That tends to be all that is required from you, so you can then focus on what you do best.
Why use a payroll service?
As a business owner, you want to focus your efforts on your revenue generating activities so you can grow your business. However, as an employer, you have a responsibility to your employees. This is how outsourcing services can help you in that matter.
Payroll is an essential function in any business and it can be especially complex and time-consuming. It can also cause a domino effect when pay goes wrong. Incorrect pay calculations may result in an employee pay complaint that you then have to spend time on resolving. Not only is this a waste of your time but will likely leave a sour taste in your employee’s mouth which isn’t great for productivity or employee morale at work.
Furthermore, missed payroll deadlines could result in HMRC fines and penalties which could really damage your cash flow and profit reserves. Outsourcing your payroll relieves you of the administrative stress allowing you to focus on your core services and lead generation.
The benefits of outsourcing your payroll function
If you manage your payroll operations in-house, you need to hire an employee to handle this responsibility if you aren’t going to do it personally. An additional employee will cost you an additional salary and company benefits.
You’ll also need to purchase payroll software to be able to conduct and deliver your payroll activities. This is an additional cost that could be avoided.
Additionally, each year you need to ensure you are using the latest version of software that incorporates the new tax rates for the year. This means advancement costs on top of your current costs.
Outsourced payroll providers usually offer much more cost-efficient service package fees.
Payroll processing is an administrative burden that can take a significant amount of time as you have to consistently devote your time each pay period, keep track of every payroll change and component, monitor all payroll deadlines to ensure timely submission, validate all payroll inputs to ensure an accurate result, and produce all the legal forms required.
An outsourced payroll provider will do all these tasks for you. All you need to do is provide the payroll data and approve the pay calculation result in each pay period and the payroll outsourcing service will take care of the rest.
Deal with the expert
Unless you used to be a payroll provider it is unlikely you’ll have experience or expertise required to effectively run your payroll. That means you either have to spend a significant amount of time learning the basics yourself or you have to train your employee to do it. Even if you hire an in-house payroll employee they’ll still require regular training in-line with changes in government regulations.
Outsourced payroll services provide expert advice and service. Therefore, you can have peace of mind that you are PAYE compliant and fully up-to-date with HMRC regulations.
Eliminate staffing issues
Payroll needs to be conducted regularly, whether that is weekly or monthly. Therefore, you need your in-house team to be available to deliver and complete payroll each time.
If the person that has the knowledge of your payroll is off sick or on annual leave then you’ll need to pick up the task or fail to meet payroll deadlines.
If the employee chooses to leave the company then not only do you have to pay recruitment costs to find a replacement but all that knowledge is lost and needs to be learned again.
This wouldn’t happen with a payroll service provider. You can be confident that your payroll will always be conducted on time by an expert, regardless of employee movements.
Overall, it may feel like a big decision to outsource your payroll department. However, it is the most cost-efficient and risk free option to ensure your payroll is conducted error free every time.
If you are considering outsourcing your payroll function submit your details for a free no-obligation quote.