What are the benefits of outsourcing payroll?

What are the benefits of outsourcing your payroll?

Running a business is no easy feat at the best of times, and when it comes to your finances it is likely that you feel more than just a little bit confused about them. After all, unless you yourself have started up a business in legalities and maths, dealing with your own accounts might not be quite what you thought you had signed up for in the first instance.

You may have imagined working for yourself, building your own company, and revelling in whatever skill you decided would become your forte. That might be the reality for a lucky few, but it is likely that you will quickly realise that your finances take over more than enough of your time. Instead of building up your business dream, you may find yourself staring at endless excel spreadsheets with a headache, unable to move forward.

Nevertheless, your finances and employees are the thing that keeps your company moving, and without them you would most likely fail miserably.

Moreover, if you are running a business, it is essential to ensure that all legal requirements are in place regarding your expenses, wages, and everything to do with the finances of your company. If you are a company consisting of more than just one person, that is you are hiring employees, you may have been made aware that something called ‘payroll’ exists. But, how do you go about sorting your payroll?

Well, you might not believe it quite yet, but your business’s payroll process doesn’t have to be quite so confusing as at first it may sound.

What is payroll?

First and foremost, let’s clear up the most basic issue. Many business owners start off small, perhaps as just a one man band, realise their business’s potential, and then quickly have to take on employees. After which, the process of managing your finances becomes slightly more difficult, and as you take on more and more people, you need to find a way to organise it.

A company’s payroll is simply their list of employees. That is everyone who they employ and pay to work for them. Business people often also use the term payroll to refer to the following:

The total amount of money which a company pays to its employees.

This refers to every employee, their full wages or salary including any bonuses, and not including any deductions. These amounts will all be added up, totalled and the amount will be used as part of the accounts records.

The company’s list of employee’s salaries and wages, bonuses and taxes.

The details of all money paid to each and every employee must also be recorded. For some this may involve totting up the hours they have worked, their hourly wage or salary and any additional payments which have been made to an employee. Many companies use time sheets, rotas or clocking in machines to keep records on times and hours that have been worked in a week. It is also highly advisable to take note of how many sick and holiday days your employees have taken. Taxes also have to be calculated for each employee.

The department in the company which calculates and pays employees.

Some companies have a specific department within the business which organises the payment of employees. Within a company, this department is often also referred to with the term ‘payroll’.

Interested In Payroll?


What impact does payroll have on a company?

The payroll process has a major impact on the success of a company for several fairly substantial reasons, both from an accounts point of view and also from a human resources perspective.

In terms of the accounts side of a business, in most companies payroll and taxes have a significant impact on the overall income of a company. From there, the net profit of a company also has to be reported and is subject to laws and regulations. If reported wrongly or late, your company might incur fines and charges, and you could end up overpaying or underpaying on taxes. This could potentially mean that you could lose a lot of money over something which could be easily avoided.

From a human resources perspective, payroll also has a significant impact on the employees of your company. To ensure you keep your employees happy, treat them fairly and instil morale, you need to pay your employees on time, and with the correct amount. This means ensuring that payments are made on a regular basis and you stick with these time scales. For example, on the same day of every month, fortnight or week.

If there are errors in your company’s payroll processes, this may result in your employees being paid the wrong amount, being paid on a later date than expected, or being deducted too much or not enough tax.

If employees end up paying the wrong amount of tax, they could be short of money for paying too much. If they underpay, it is likely that they will have to pay more in bulk at a later date; they may not be prepared, sometimes resulting in money troubles.

Employees who are not satisfied with a company’s payroll processes may become annoyed by the issues, and could become unhappy in their job. Making sure the correct payments are made to employees is one of the most basic requirements for your employees to feel valued and safe within their job. Research suggests that over half of leaving employees state the main reason for leaving to be that they feel their employers do not care about them, and lack of or wrong payment received definitely falls within this very category.

For these reasons, it is easy to see why a working payroll system needs to be put in place to ensure the success of the company. Risking the payroll process means risking your entire business, so place maximum importance on your processes.

Payroll keeps advancing

Over the years, historically payroll and the methods surrounding it have been constantly changing and developing. This is partially due to changes in requirements from the Government, but also to try and make the process as accessible and easy as possible for companies.

New rules, regulations and expectations mean that it is more important than ever to keep track of what is going on with the payroll in your company, and you need to make sure that everything is under control at all times in order to succeed.

With so much opportunity to move around in their careers people are choosing to stay in one job for a relatively short amount of time, it is also important to keep employees happy by maintaining that their payments are correct and on time.

Mistakes are not satisfactory from an employee point of view or when it comes to HM revenue & Customs, so it is important to keep up to date with how payroll is progressing and what can be done to make the process as easy as possible.

So, how has the payroll process advanced over the years? Below in chronological order are the payment methods businesses have used over time, showing the development in laws, requirements and expectations for the Government and for businesses.

  • Cash payments
  • Handwritten cheques
  • Printed cheques
  • Manual direct transfers of money into employee’s bank accounts
  • Online direct deposits into employee’s bank accounts

It’s clear to see that the payroll process has advanced greatly over time and much has changed. It is important to keep up with the advances of payroll processes so that your company stays legitimate and within the law. With progression happening so quickly, it is clear to see how becoming stuck at one stage could be detrimental for a company. For example, nowadays it is a widely known fact that simply paying employees cash in hand payments which are not securely recorded would not be sufficient for your records.

What’s more, that simple list is not the end of the payroll progression, as more and more companies are now opting to use online systems such as the one provided by Payroll.co.uk to process their payments. It is expected that this will become a more and more widely used method of payroll, eventually meaning that other methods will become old fashioned and not as widely accessible.

If you fail to keep up with the advances in payroll, you also risk falling behind in the industry you are in. Whilst your competitors are taking advantage of the new systems available, saving their own time and money, they will be in a much better position to expand and grow. For this reason it is highly important to make sure that you not keep up with these modern methods to ensure you don’t fall behind in all aspects of your business compared with your competitive market.

Need Specialist Payroll Advice?

Get In Touch

Processing payroll

It’s all very well knowing the importance of keeping up with payroll, and what it is in its most basic form, but how do you actually process it? Well, firstly you need to ensure that you have followed all the right procedures and regulations for hiring employees. This means registering them with the appropriate agencies, obtaining the appropriate employee ID numbers, and compiling with all the necessary regulations. Only once this is sorted can you then start processing your payroll.

There are three pieces of information you need to know in order to process your payroll. These include:

  • The amount you are paying each employee, be it one person or multiple
  • How much you will need to deduct from each employee’s paycheque for taxes and any other payments
  • The total of how much you have paid your employees, how much has been deducted and for which reasons.

All these pieces of information are important because you will need them for your business tax forms. From there, you can pay your employees the correct amount on the correct date, pay the taxes which are owed, and keep your business books up to date ready for reporting at the end of each tax year.

If you’re more than slightly confused about the process of payroll, that is completely normal. Many business owners manage their business perfectly but feel clueless when it comes to organising their payroll. This is because the process is extremely complex and often requires years of training in accounts and business to really be sure you are following the correct procedures.

When you add to that keeping up with unplanned overtime, pay rises, differences in taxes, and the many more deductions which can be taken into account, from pension schemes to national health insurance contribution and even the repayment of student loans, there is a lot to consider. It can even be enough to stop an entrepreneur or start up business from moving forwards with their plans.

But, you don’t have to worry just yet. Don’t give up; there are easier ways to go about the process than simply struggling on your own.

What are my options?

When it comes to managing your payroll, it is clear to see that there is no getting around doing it; it has to be done and is one of the most important aspects of your business and accounting system. However, there are more options than staring at the screen expecting it to be miraculously sorted the harder you look.

The first option is to hire an in-house payroll department. This will involve paying someone specifically qualified in accounting, human resources or business administration and preferably someone who has experience in this area, so that you won’t be required to train them. Clearly, this option will require you to dish out at least another full time salary, reply on a new employee to deal with the most important aspect of the legalities of your company, and will require a lot of hard work and effort.  

The other option, which is fast becoming the most popular, is to use a professional provider and outsource your payroll such as by Payroll.co.uk.

The complexities of processing payroll are becoming more and more integral and complex to ensure that rising fines are not implicated, and it is difficult enough to start up a business and keep it going, even not taking into account payroll issues too. For a small investment, the worry of obtaining such penalties can be eliminated, and your business has more opportunity to grow and succeed. In a nutshell, the penalties for accidentally botching your payroll are much more significant than the costs of outsourcing your payroll to a professional company.

With outsourced services becoming the go-to option in many different industries, there is no question of a doubt that many businesses, new and experienced are using outsourced payroll systems to help them to manage their accounts, and this trend is about to become bigger and bigger.

Even if you are more than happy with the system you currently have in place for processing your payroll, switching to an outsourcer will still be highly beneficial to your company. The efficiency of the work being done in a company is becoming more and more important for businesses who clearly want to maximise their valuable profits, and decrease their expenditures in any way possible whilst still performing to the optimum degree.

Interested In Our Payroll Services?


What are the benefits of using an outsourced payroll service?

As suggested, outsourcing payroll services for businesses is growing in popularity by the day with more companies opting for this efficient option to ensure that their payroll is as accurate as possible.

So, why are so many companies choosing this option? And is it worth outsourcing your payroll as opposed to your other options? Below are just a few of the benefits of using an external payroll service:

Saves money

For every business, the ideal is to optimise the amount you spend to ensure maximum profits are gained. Using an outsourced payroll provider is much cheaper than the other options for your managing your payroll.

Using a professional external provider saves you from hiring many payroll assistants, because using a company that specialises in payroll means it will take a much shorter amount of time to complete. In any business, time is money and putting your payroll with the right external partner will not only save a lot of time, but will save you a lot of money in the process.

Taxes filed correctly

Last tax year, HM Revenue & Customs fined over 28,000 people for incorrect tax returns, and that figure appears to be growing on a yearly basis, possibly due to the complexity of what is required.

If your business’s taxes are not filed correctly or are late, you will incur fines, which can get pretty hefty, and if this is a regular occurrence, your fines could increase even more drastically, meaning that you will be unnecessarily spending money where you shouldn’t be. In worst case scenarios, you could even end up owing a lot of money you didn’t know about, and having to pay it back at a later date when you may not have the finances due to other investments.

With the use of a professional provider of payroll, you can be sure that your taxes will be filed correctly and on time.

Stress free for the business owner

For the most part, when the end of the tax year comes around and all the accounts have to be tied up, the business owner is under a lot of stress to ensure that everything is in order. The books have to be up to date, P60’s need to be organised, and preparations for the new tax year need to take place. However, if you have the confidence that everything is dealt with properly, this time of year need not be such a worry.

Increase employee satisfaction

Outsourcing your payroll to a specialist payroll provider means that it is unlikely any errors will occur, meaning that you can ensure employee satisfaction all round in terms of them obtaining the correct payments on time from your company. This creates a good example for your employees in terms of reliability, and they will be able to sort out their financial commitments accordingly, able to rely on you to pay them correctly as promised.

Your employees will also be more committed to you if you pay them regularly and keep on top of their payments. This means that they are less likely to leave, and will be better, more efficient workers for you.

Here at Payroll.co.uk, we have an easy system to get your payroll system up to date and back into the 21st century. We use fully HMRC approved software, ensuring that all the correct procedures are followed for you to sit back, relax and be sure that everything regarding your payroll is under control with us.

All our processes are completely compliant with legislation; and we can ensure that yours are too on your behalf. We take your business just as seriously as we take our own, assuring that all your details are correct, up to date and on time, and guaranteeing a stellar service.

We can assure you that we take your data security just as seriously as you do; we know how important it is for your company information to be treated very carefully, with full protection and maximum security, and you can rely on our total trustworthiness.

Whilst you can rely on us to take the reigns on your payroll, you still retain your complete visibility and control of your reports.

We take the stress out of your payroll, ensuring that your staff are paid on time, every time and everything runs completely smoothly.

When outsourcing your payroll to Payroll.co.uk, you can be assured that all the vital financial tasks are dealt with and in order, leaving you to focus on the thing you signed up for and are best at: running your business.

Contact us today to get the process started; we can get you set up on the same day and we’ll have everything running smoothly instantaneously.

The benefits of outsourcing your payroll

1. Security and Compliance

  • We are fully up-to-date with legislation ensuring you remain compliant and up-to-date with changes in taxation or payroll legislation.
  • We take data security as seriously as you do.
    • We take customer data very seriously and have in place the latest technology in terms of firewalls, anti-virus software and password protection. Also, updates are performed regularly to make sure we always have the latest security updates.
    • Our servers are hosted in a secure location where only a few people have access to. This ensures not everybody can access the data. We limit every single employee to data access depending on their job and all our computers are password protected to make sure no one else can access key data.
  • HMRC compliant – We use fully HMRC approved software.

2. Visibility and Control

  • Ensure employees are paid accurately, on-time, every time!
  • Have the peace of mind that the vital tasks are in-order, leaving you free to do what you do best – run your business.
  • You retain complete visibility and control via reports.

3. Time Savings

  • The task of payroll can be daunting, time consuming and complex, we require minimal input from you
  • We appreciate accuracy and speed is essential to keep your business running day to day

4. Cost Savings

  • You will get a trusted supplier without the expense or commitment of recruitment.
  • You will reduce high Accountancy fee’s when you stop them performing payroll tasks. With our transparent pricing structures you only ever pay for the business payroll you require – with no hidden costs or catches.

Download your guide
‘The 7 Steps to Auto Enrolment’

Download Guide 

By downloading this guide, you give your permission to be contacted (phone or email) by payroll.co.uk in regards to the content.