Outsourcing Your Payroll: The Reasons Why You May Want To Do It
Payroll outsourcing in the UK is becoming far more common these days as business owners realise the many advantages that it can produce. However, is it the right way to go for your business? Let’s take a look at how it all works.
In a nutshell, outsourcing your payroll will get rid of a lot of time-consuming and non-productive work that you have to do one way or another. As an employer you have the responsibility of seeing to it that your employees are getting paid correctly, that you are compliant with all the requirements of HMRC, and also the Pensions Regulator.
But when should you consider outsourcing your payroll? This depends partly on the size of your business – how many employees you have – and whether you have the expertise to handle it yourself. The latter is unlikely because you have not had the necessary training. Your expertise may lie in one of hundreds of different areas, but whichever one it is, that is what you know and understand and is what brings you money. Running payroll earns you nothing.
You could also recruit someone to carry out all your payroll functions in-house for you, but is there sufficient work for a full-time individual doing nothing other than working on your payroll? Unless your business has grown to a considerable size, the answer is that you probably do not have sufficient work to justify that.
That means that you are left with three choices. You could do it yourself, and indeed you may have been doing that. You could train another employee to carry out the work for however long it takes, as an additional function to their core tasks. Or you can outsource it to a specialist company. There are really no other choices.
There are several reasons why companies choose to outsource their payroll. These are as follows:
• There are cost savings by avoiding the need to use in-house resources to comply with complex payroll requirements,
• Ease of ongoing administration of payroll through changes in personnel, reduction or increase in compensation structure, and filing of reports to government authorities
• They will avoid mistakes and tax compliance penalties. It is very easy for in-house employees to make payroll errors.
• There is no need to pay for software and implement it.
• They do not need to deal with HMRC, pension regulators, or employment law.
• There is no need to send payslips, as that is done by the outsourcing company.
• In many cases, the payroll company will be able to make payments by BACS, so all you need to do is to send them one payment to cover everything. They can also make payments to HMRC.
Different Businesses Have Different Needs
When considering payroll outsourcing in the UK it is important to note that different businesses will have differing requirements, so you need a payroll provider that is flexible and can provide you with a package that is tailored to your individual requirements. Furthermore, as your business grows, your requirements may change, and you need to know that they can change with them.
You also need to have a payroll provider who can work within your budget and provide you with a fixed fee per employee. In addition, you need to be sure there are no hidden charges or extra fees.
You also need a payroll provider who has experience and keeps up to date with the ever-changing requirements of HMRC and who doesn’t make mistakes. You have to remember that whoever does your payroll, the buck ultimately stops with you. You are responsible, and it is you who will suffer any fines from HMRC for making mistakes and/or underpaying taxes.
At PayCheck we have been doing payroll for our clients since 1996 and we process over 50,000 pay cheques every month for more than1,500 companies ranging from the very small to the very large. HMRC requirements are changing all the time, with two recent examples being RTI – Real Time Information – and pensions auto enrolment. We keep right up to date with all HMRC changes which is something that the average small business simply cannot be expected to do.
By outsourcing your payroll responsibilities to us you can save time and money, avoid errors, and above all spend your time doing what you should be doing, which is growing your business.