Why Outsource Your Payroll?

November 2, 2021

There are many reasons to outsource the task of dealing with your payroll when you are an SME. Big businesses can afford to maintain payroll departments staffed by people who do nothing else. Having said that, more and more large businesses are starting to outsource their payroll because they can see the advantages.

If you are a start-up or your business is very small and you only have a couple of employees, then your payroll won’t take up much of your time and you can probably manage it yourself.

However, for businesses of any size in between those two extremes, outsourcing the payroll makes a considerable amount of sense. Doing it all in-house is just burning money. When you take into consideration all of the things that you have to do – the hours your employees spend on payroll, payroll software costs, printers, printing and distributing payslips, writing out and posting pay cheques or paying them into the employees’ bank accounts, doing all the tax returns – it all adds up to a lot of money. You would be surprised just how much money you are spending and how much could actually be saved by outsourcing payroll solutions in the UK.

Not only that, but doing payroll is a total overhead: it makes you no money whatsoever. All the time that is spent on payroll could be spent doing something that brings in more customers.

Then there is the fact that, unless your business is large enough to employ an accountant or someone with expertise in payroll just to do that job, you are going to have to train another employee to work on the payroll part time – perhaps one or two days a week.

But here is where another problem comes in, because even if you have one of your own employees doing that, that employee is going to need to take holidays. People also go sick and just don’t show up for work one day. What happens if your payroll employee goes sick two days before pay day? What happens if that employee decides to leave?

You Have To Start All Over Again

Suddenly you have to start all over again and train another employee to do the job. However, you may find it difficult to replace that employee and train up another individual, which can be a logistical nightmare when the next pay day comes around. When you outsource your payroll, things such as holidays and staff taking time off sick will have no effect whatsoever on your payroll.

Not only that, but you might not have an employee who is either competent enough or is happy to do the job. Not everyone is good with numbers, and when you are dealing with payroll there are no excuses. It has to be right. And it has to be on time. HMRC has a nasty habit of issuing fines to businesses who fail to submit their returns on time.

Furthermore, when you are doing payroll in-house you also have to be aware of all the changes in the tax procedures and legislation. These can occur at any time, yet it is vital that your payroll employee understands them and takes them into account when preparing the payroll, but that employee may simply not be aware that a change has taken place.

Mistakes can not only be upsetting for your other employees, but they can be upsetting for you as the boss, because ultimately the buck stops with you, and any fines from HMRC come off your bottom line. In addition, mistakes in payroll are far more likely to occur when doing payroll in-house than when outsourcing to a company providing payroll solutions in the UK such as ourselves at PayCheck.

Another thing to consider when you have an employee doing your payroll part time is that he or she could be put to far better use if spending that time on something that is productive. If there is one thing for sure, it is that doing payroll is not productive.  

At PayCheck we carry out payroll for all sizes of businesses from the very small to large corporations, and we will design a payroll solution that fits your business needs today yet will grow with you as your business does.

This article was written by
PayCheck Team
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