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Payroll has developed over the years and is much more complicated than just processing payslips. You need to think about PAYE and NIC payments, special circumstances, annual leave and much more. It’s challenging to keep track of all your employees and their circumstances. Some may be on maternity or paternity leave, while others are currently on long term sick leave. All of these circumstances impact their salary and complicate payroll processing.
Payroll requires a lot of time and effort to get right. Making a mistake could damage your business’ reputation and lead to a fine from the HMRC.
You could outsource to a third-party provider who specialises in payroll operations. You can use a payroll management team to handle the system. Here are the pros and cons of outsourcing payroll.
The benefits of
Payroll service providers are experts in what they do. They will be more accurate and reliable when processing a large corporation with hundreds of employees. You can save time and allow your team to focus on other tasks. The payroll provider will maintain records of new hires, termination, benefit deduction and much more. Payroll can be a tedious and frustrating task. Allow your in-house team to focus on running your business while an outside provider handles their salary.
You don’t need to worry about HMRC deadlines and paying your employees on time. There are constant changes with taxes and legalisation. Someone else can lift the burden off your shoulders and stay up to date with the details of payroll.
The downside of outsourcing payroll
You will need to coordinate with your payroll provider and support them when possible. You can’t just hand off the payroll and never speak with them again. In a sense, you are hiring a new employee and committing to managing them.
You need to be realistic with your expectations for the outsourced provider. You can’t give them every employee´s data one hour ago and expect the entire payroll to be complete. Make realistic deadlines and give them ample time to complete the work to a high standard.
You also need to consider the security risk of hiring someone from outside your company. The provider will handle personal information about your company and employees, such as addresses, bank details and phone numbers. You need to trust this individual to keep your data safe and secure. Their system should be protected with cybersecurity software to stop any cyberattacks.
If you are struggling to trust an outside provider, you could use HMRC payroll software instead. Payroll software optimises the entire operation and reduces the chance of error. You can purchase the software, input the data and tune the settings. The software will handle payroll every month, and you just need to do a little maintenance.
Pay attention to the payroll process, and make sure it is done right.