Why outsourcing payroll is increasingly making sense for small businesses
Small businesses are increasingly looking to outsource their payroll externally. Sam Skyring of TaxAssist Accountants looks at the reasons why outsourced payroll services make sense for SMEs.
Why do businesses outsource their payroll?
When managing a growing business, it’s important that business owners have the time and headspace needed to do what’s necessary to meet customer expectations and create an engaging, motivating place of work for employees.
Entrepreneurs who are bogged down with daunting red tape such as HM Revenue and Customs (HMRC) compliance not only have less time to run their businesses, they also have the stresses and strains of keeping up with changing legislation.
Which is why payroll is one area where small business owners are increasingly looking to outsource to third-party providers.
What are the benefits of using an outsourced payroll service?
There are several clear advantages for SMEs that outsource their payroll. Here are just some of the main benefits to using a dedicated payroll provider:
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They ease the pressure of compliance responsibilities
The advent of Real Time Information (RTI) has forced companies to provide data at the time of payments made to employees via payroll software, resulting in increased scrutiny on business owners and their payroll practices. Not only that, the implementation of auto-enrolment workplace pension schemes, making it compulsory for business owners to enrol eligible staff into private pension schemes, has also raised the stakes in terms of payroll compliance.
One of the main benefits of outsourcing payroll is the peace of mind it brings for an employer in knowing that its payroll is being calculated precisely and processed correctly.
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Most offer 24-hour access to payroll information
As most third-party payroll specialists offer online portals and dashboards for employers to use, often businesses can quickly and easily access an overview of their payroll function and teams whenever they choose to. Information will include the likes of overdue payments to HMRC, employer details and any employee requests, such as annual leave applications.
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Many incorporate HMRC-approved payroll software
Another plus point of enlisting the support of a payroll provider is their use of HMRC-approved payroll software. This software has been designed specifically to improve the efficiency of payroll reporting for business owners, allowing them to keep on top of staff leave and synchronise this with their payroll.
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They combine sensitive HR documents under one roof
It’s also possible to use a third-party payroll portal to act as a digital ‘hub’ for your company’s sensitive HR documentation. Placing all relevant employee documentation (eg company handbooks, contracts, newsletters or training material) in one secure hub can reassure staff when they need it the most.
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They stay on top of changing legislation
Arguably the most important aspect of outsourcing payroll to a professional payroll provider is the knowledge that your business will always comply with the latest payroll legislation. Specialist payroll providers will have their finger firmly on the pulse of new legislation and upcoming deadlines, allowing SMEs to move with the times.
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They can save time and money
Last but by no means least, outsourcing payroll to external service providers can not only save small business owners time but money too. Naturally, outsourcing payroll can cut staffing costs but SMEs that choose to manage their own payroll also run the risk of making costly reporting errors that can lead to unnecessary fines from HMRC.
Should my company be outsourcing its payroll?
Overall, those small businesses that do outsource their payroll to a professional provider should benefit from their new partnership, with providers helping SMEs to keep abreast of new reporting requirements and deadlines and ensuring a reduction in in-house stress.
About the author
Sam Skyring FCCA is the senior training and communications manager at TaxAssist Accountants, a UK wide network of small business focused accountants supporting over 75,000 small businesses across 320 locations.
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