Payroll can become disorganised and stressful when you have some employees. Here’s everything you need to know about payroll outsourcing.
What is outsourcing payroll services?
Like most jobs you don’t want to do or can’t do, there are experts who will take payroll off your hands. Payroll providers can do a lot, from calculating pay and deductions to transferring money into your employee’s account and filing connected taxes. Or they might just do part of the work, depending on what you need and what you can afford.
Why outsource payroll?
Running payroll can be complicated and time-consuming. Plus, there are a lot of legal requirements, which means there are serious risks to getting things incorrect. For these reasons, many business owners prefer to leave it to the professionals.
In addition, payroll providers are often able to do your payroll at a quite low cost as they use software to automate many of the tasks involved.
What do payroll providers do?
Payroll providers may offer dissimilar levels of service, which you can select depending on what you need. But they’re generally all capable of:
1. Working out pay (including paybacks and reimbursements)
2. Removing employee income tax
3. Making any other deductions, such as retirement aids
4. Filing (and even paying) taxes with HMRC.
5. Making payments to employees
6. Keeping payroll records
Kinds of payroll service
Payroll services come in many shapes and sizes. They can be accountants, bookkeepers, or expert payroll companies. Some providers may be better at dealing with small payrolls, while others target big industries. They also differ in the level of service they offer and the way they deliver it.
There are two broad categories.
Full-service payroll provider
A full-service payroll provider completes your payroll from start to finish; all you have to do is supply them with your business and employee information. They take care of everything else.
Full-service payroll is usually easier, but, as you’d expect, it costs more. You also need good systems in place for sharing data. They need timely access to timesheets (for hourly workers) and notice of changes to a worker’s employment terms or tax standing.
DIY payroll providers
Many providers do the hardest parts of payroll while leaving the basic admin to you. For example, you might record time and attendance and keep employee accounts. But they’ll calculate all the wages, taxes, and other deductions. And they’ll set you up with a software system that makes your tasks straightforward.
How do I select a good payroll service provider?
Payroll is a serious part of your business. Here’s what to consider when selecting a payroll provider:
1. Get the right level of service: Make sure your provider brings the right level of service; you don’t want to be paying for what you don’t need.
2. Understand what you’re paying for, what you’ll need to handle in-house, and what you’ll pay for additional services.
3. Automate the easy stuff: Be sure your provider is using software to automate the easy stuff so you’re not paying specialised fees for basic admin jobs.
4. Check personnel information on a regular basis. Inquire about their procedures for verifying and updating personnel information. A change in an employee’s information may influence deductions and regulatory requirements; therefore, providers must be attentive to keeping them up-to-date.
5. Data security. How does your provider handle the privacy and security of your company’s and employees’ data? Inquire about the precautions in place to maintain the security of your data.
6. Use what you have. Examine what your accounting software can do. You may already have the resources to automate payroll; perhaps all you need is assistance from an accountant who is familiar with the software you use.
When it comes to payroll outsourcing services, it frequently boils down to what is most efficient and cost-effective for your company. Before making a decision, do your research and examine your company’s requirements. If you choose the appropriate provider, you’ll spend less time worrying about payroll and more time doing what you do best: running and growing your business.