Why You Should Outsource Your Payroll

 
 

As a small business, it can be a false economy to try to do everything yourself. One particular area of concern for us is when clients run their own payroll for their employees and mess it up. Here we share our five reasons why you should outsource your payroll, and why we do too.

1. Most payroll service providers are experts at running payroll services because that is solely what they do. This sounds obvious right, but it’s often overlooked. Are you an expert? Some businesses delegate this task to employees with no training whatsoever. Your payroll provider will run your payroll correctly under RTI (Real Time Information) and maintain your PAYE (Pay As You Earn) records. They will make sure you pay your employees the correct amounts so you avoid any risk of getting this wrong and upsetting your team. It will cost you time and money to keep up to date with legislation yourself.

2. HMRC can charge penalties if you get your payroll wrong or pay your PAYE late. It is much better to have a professional run the payroll for you and advise you when and how to make the payment to make sure you don’t forget to pay, or get it wrong or pay the tax man unnecessarily.

3. Since the new Auto-Enrolment rules came in, you must run a Workplace Pension Scheme alongside your payroll and contributions will need to be reflected on your employees payslips based on salary amounts. The Pensions Regulator will charge penalties for incorrectly filing or failing to register and meet the requirements for Workplace Pensions. Your payroll provider will take on the scheme management duties and monitor your re-enrolment obligations and ensure you are fully compliant for minimal cost. The rules are complex and can easily be overlooked and chase issues later.

4. Outsourced payroll providers are usually one of the most cost effective outsourced business services. They usually charge on a per payslip basis and are responsible for calculating the correct salary tax and NIC for your employees salaries. Your time would be better spent building your business or in other ways taking on other responsibilities. The small saving you would make on doing your own payroll could cost you way more if you get it wrong! Also, it’s not the most exciting part of running your business, so focus your energies elsewhere, such as driving more sales, motivating your staff, initiating and managing KPIs and ensuring your finances are otherwise up-to-date.

5. New GDPR regulations came in from 25 May 2018, and this legislation applies to how you handle your employees data too. Your payroll provider will have a secure online portal that meets with the new GDPR requirements to ensure your employees get their payslips via an online GDPR compliant platform. This will be included in the fee for running the payroll and will save you the aggravation and time from distributing payslips by hand, which employees may inevitably lose.

Although not entirely related to payroll, we recommend you also outsource your HR function to an independent HR consultant or pay a monthly subscription to have a team on hand to ensure you stay compliant and do the right thing under any circumstance.

We can also suggest using an online team management solution like BrightHR which offers an online platform to monitor staff working time, sickness and days off. This can really help when working out your payroll.

To read more about your responsibilities, click here.