Payroll FAQ

If you are considering outsourcing, September to March is ideal for reviewing your company’s current payroll processes and exploring potential improvements.

With a wealth of experience dealing with payrolls of all sizes and complexities, payroll bureaus are in an excellent position to review current processes and make suggestions for improvement and efficiencies.

When reviewing your payroll look at who, what, where, when, and how:

Who – Who manages the payroll process? Does your company have one person approving all payroll instructions? Does your business require a two-step approval process?

What – What details are calculated on payroll each period? Do you have a payroll where all salaried employees are paid the same amount every month, or is there always variable data such as overtime, commissions, and hourly paid employees?

Where – Where is the information coming from? Is the data being put into an HR system or a Time and Attendance system? If so, consider which bureaus can integrate with your HR or T&A software to reduce duplication in keying data.

When – When is all the information gathered, and how long is the payroll process between starting the process and paying employees? Do you have lots of last-minute changes? If so, check that a bureau can fit in with your timelines; if not, this can cause issues with guaranteeing payday deadlines.

How – Assess whether payroll is managed internally or outsourced to a third-party provider. Evaluate the software and tools in use, including the level of automation. Examine the efficiency and accuracy of data collection, entry, and verification processes. Identify any inefficiencies or issues within the current setup.

Payroll outsourcing is the practice of hiring an external company to manage the payroll functions of a business. This can include a range of services such as payroll software, employee benefit management (e.g., P11Ds and PBIK submissions), distributing wages, producing year-end tax documents, and calculating additions and deductions. It is a strategic move for businesses looking to save time, reduce operational costs, and leverage the expertise of payroll professionals.

Payroll outsourcing is a strategic solution for businesses looking to enhance their payroll management. By partnering with a specialised payroll services provider, companies can leverage expertise in payroll processing, ensuring accuracy and compliance with tax regulations.

This service includes the initial setup, ongoing payroll calculations, tax withholdings, and comprehensive reporting. Companies benefit from the convenience of having employees’ wages calculated and distributed, either through BACS payments and digital payslips by the payroll bureau. Additionally, the firm manages all tax-related filings, offering peace of mind and allowing businesses to concentrate on their core activities. With payroll outsourcing, companies can expect a seamless integration of payroll solutions into their operations, handled by professionals dedicated to payroll excellence.

Outsourcing payroll functions can be a strategic move for businesses aiming to optimise their operations.

One of the primary advantages is cost efficiency; it eliminates the need to invest in specialised payroll software or hardware, and potentially reduces the need for in-house payroll staff and associated overhead costs. Outsourcing payroll can be especially helpful when you do not want to solely rely on one person to manage your payroll. There will always be someone available to oversee your payroll in the case of sick leave, emergencies, or annual leave. This shift can result in substantial savings, particularly for small to medium-sized enterprises and scaling businesses.

Payroll providers are well-versed in the intricacies of payroll management, ensuring businesses benefit from their expertise and stay updated with the latest payroll practices. Payroll processing is notoriously time-consuming as you navigate complex payroll calculations and compliance. By entrusting this task to experts like Pay Check, businesses can reallocate their focus toward core activities that bolster growth and profitability.

Compliance is critical for any business, and outsourced payroll services excel in this area. They keep abreast of the latest tax laws and employment regulations, safeguarding companies from costly penalties associated with non-compliance. Payroll bureaus reduce the risk of errors and guarantee compliance with tax laws and regulations, as payroll providers are specialists who stay up to date with the latest changes.

The scalability of outsourced payroll services is also a significant advantage. As a business expands, the payroll process can seamlessly adjust to accommodate new hires, seasonal workers, or organisational changes without the need for additional internal resources.

The security of sensitive payroll data is paramount, and professional payroll providers invest heavily in state-of-the-art security measures to protect against potential data breaches and fraud. In summary, the decision to outsource payroll can lead to improved accuracy, efficiency, and security, allowing businesses to focus on their strategic goals while ensuring that their payroll obligations are managed expertly.

Most payroll service providers offer seamless integration capabilities with various human resources, pension management, and financial software systems. The typical integrations include:

• SAP
• Xero
• Sage
• Zoho
• Exact
• Access
• Kashflow
• Intuit Quickbooks
• Microsoft Dynamics

Payroll costs vary from fixed banding costs dependent on the number of employees and frequency to a price per employee period.

Other considerations include potential additional costs such as fees for the BACS payment facility, managing Auto-Enrolment, end-of-year processing (e.g., P60s), mid-period calculations, and Statutory Sick Pay. Additionally, it’s important to check if charges apply only to active employees or if there are fees for maintaining records of former employees, which can be costly with high staff turnover. Also, consider any rerun costs and fees for calculation amendments.

Payroll software costs can vary widely and increase based on the features and capabilities offered. Most payroll software solutions provide seamless integration with pension schemes, human resources, and financial systems, streamlining payroll administration

Outsourcing payroll can lead to significant cost savings and provide access to specialised knowledge. It can be especially cost-effective for small, medium, and scaling enterprises.

Whether payroll services are worth the cost depends on several factors specific to each business. However, many businesses find value in outsourcing payroll due to the time savings, accuracy, compliance, and expertise that professional payroll services offer. Here are four items to consider:

Cost Efficiency – The cost of payroll services can vary significantly based on the specific needs and level of service required by each company. For instance, a small company with five employees might find fully managed payroll services starting at a certain price point, while partial payroll services could be more economical. To get a tailored quote that fits your requirements, please connect with us for further details.

Time Savings – It frees up considerable time, allowing you to focus on core business activities.

Expertise – Payroll companies ensure your payroll processing is accurate and compliant with current laws. They keep your payroll management and software up to date with the latest HMRC regulations. Additionally, they continuously train their employees to process payroll as efficiently as possible.

Scalability – As your business grows, payroll services can easily scale to accommodate more employees.

Additional Services – Payroll providers like Pay Check offer additional features like tax filing, direct deposit, and HR support, which can add further value to your business.

The decision to outsource payroll should be based on a cost-benefit analysis tailored to your business’s needs and resources. It is also advisable to get multiple quotes and compare services to find the best fit for your company.

Most providers like Pay Check can register a scheme with HMRC for PAYE for an additional charge. Payroll companies can also offer pension set up with NEST with a fully managed service by uploading the pension reports. However, they cannot register a company with Companies House, or handle their VAT registrations etc.

Your company’s payroll can be onboarded anytime during the tax year. The start of the tax year is normally the peak time for payrolls migrating from one system to another. This is because you start the tax year with zero balances. Considerations should be made if you are changing from one bureau to another as this will be a remarkably busy time for migrations. In addition, if you begin with zero balances, the new bureau will not have any of your company's payroll records from the previous tax year.

If you have any questions, you will only have the option to contact your current provider for support, not your previous provider, and this means that your new provider will be limited in terms of their ability to assist you.