Having a slick, robust and reliable payroll system benefits both businesses and employees.
Remember, efficient and accurate payroll is a matter of legal compliance, so it’s well worth getting it right without any slip-ups.
Rather than handling this intricate process in-house, lots of businesses choose to outsource payroll.
Many businesses – both large and small – outsource at least some of their requirements, including payroll. Data shows that some 67% of UK startups outsource at least some of their business activities.
Here are five reasons why to consider outsourcing payroll.
1: Time efficiency
Payroll processing is a meticulous task that tends to be slow and time-consuming.
The process involves calculating wages and tracking hours, managing deductions and ensuring accurate tax compliance.
While payroll tools have sped things up for small businesses with just a few employees, it’s still daunting for medium-to-large-sized firms with larger workforces and varying employment contracts.
Moreover, if you’re a business owner, managing payroll might just be a bridge too far, considering all the other hats you’re wearing!
By outsourcing, you liberate countless hours that would otherwise be spent on these tasks. This time can be redirected towards your core business operations.
The result? Increased productivity, as you and your team can focus on tasks that directly contribute to your business growth rather than getting bogged down in administrative duties.
2: Access to external expertise
Outsourcing payroll provides a direct line to specialists who comprehensively understand the payroll process.
This is vital for compliance, as payroll specialists stay abreast of the latest UK regulations, tax codes, and best practices, ensuring your business complies with HM Revenue and Customs (HMRC) requirements.
Additionally, outsourced payroll professionals are equipped to handle the complexities of Real Time Information (RTI) and auto-enrolment pension schemes, which can be challenging for businesses to manage in-house.
This level of expertise minimises the risk of costly errors and penalties, providing you with peace of mind. You can rest assured that your payroll is handled by professionals who understand the ins and outs of the system.
3: Cost-effective
Outsourcing payroll can be a financially savvy move for your business.
When you consider the cumulative hours your staff spend on payroll tasks, the cost of maintaining up-to-date software, and the potential financial penalties for errors or late submissions to HMRC, the cost-benefit analysis often leans in favour of outsourcing.
An external payroll provider can offer a fixed-cost service, providing predictability for your budgeting process. This allows you to plan your finances more effectively, knowing exactly what your monthly payroll costs will be.
Additionally, outsourcing eliminates the need for in-house payroll software and the associated maintenance costs, further contributing to cost savings.
Carefully analyse the time and money you’re spending on payroll in-house – you might discover that outsourcing is considerably more cost-effective when accounting for both time and money saved.
4: Enhanced security
Payroll processing involves handling sensitive data, including personal and financial information.
In the wrong hands, this data could be used for fraudulent activities. Plus, payroll data is subject to data protection legislation such as GDPR, which adds a further layer of compliance.
Professional payroll providers have stringent security measures in place to protect this data. These measures include encryption technologies, secure servers and strict data access controls.
This shields your business from potential data breaches and compliance issues.
5: Scalability
Outsourcing payroll offers a scalable solution that can grow with your business. As your workforce expands, your payroll needs will inevitably change.
You may need to manage different pay scales, handle more complex tax situations, or process payroll for employees in different locations.
An outsourced provider can adapt to business changes. They have the systems and processes in place to handle payroll for businesses of all sizes, whether you’re expanding operations, onboarding new employees, venturing into new markets, or even downsizing.Outsourcing payroll enables businesses to grow and scale without the unnecessary administrative burden that arises when dealing with payroll in-house.
Summary
Paying employees on time and complying with tax is paramount.
Outsourcing payroll is not merely about delegating a time-consuming task – it’s a strategic move that can enhance efficiency, provide access to specialist knowledge, save money and bolster security.
The time and money saved on payroll can be directed into other business-critical processes.
Talk to us about outsourcing your payroll
