National Payroll Week, which was established by the Chartered Institute of Payroll Professionals (CIPP) takes place from 4-8 September 2023 and looks to highlight the great work of payroll professionals.
We thought it was only right then that this week’s blog focus on payroll – specifically the benefits small businesses can gain from outsourcing their payroll processing.
We’re lucky enough to have an experienced Payroll Manager at Raw who does an excellent job supporting our clients with their payroll management. We know that having a payroll professional handle all things payslips is just another way busy business owners can save time, avoid payroll errors and focus on the things they do best.
How does outsourcing payroll benefit me, we hear you cry?!
Well, we’ve compiled a list of what we believe to be the top five benefits you’ll experience if you were to outsource your payroll function, to an experienced payroll professional.
1. Saves you time
We’ve mentioned it already, but we’ll say it again. Outsourcing payroll will save you time. If you’re a small business owner, the likelihood is you’re not an experienced payroll professional. Therefore, calculating payroll is unlikely to be your forte and unsurprisingly takes some time.
Payroll is no quick job – it requires focus and attention to detail. As your team grows the time commitment payroll demands will only increase.
Outsourcing the function to a payroll specialist not only saves you time now, but it’s a decision you’re making for the future of your business. If you plan on expanding your team the process will take up more and more of your precious time, so consider whether outsourcing payroll is the right move for you.
2. Gives you peace of mind
There are several considerations that need to be thought about when running payroll, which make the task more complex than first thought.
For example;
Choosing the right payroll frequency – this could be weekly, fortnightly or monthly. Weekly or fortnightly means you’ll need to run payroll more regularly, increasing the time involved.
Auto-enrolment – as an employer you are required to auto-enrol employees into a pension scheme where they meet certain criteria. Ensuring compliance with this is very important.
Deduction calculations – when running payroll you’ll need to calculate the payroll taxes including income tax and national insurance deductions. Something you don’t want to get wrong!
Holiday pay – employees are entitled to holiday pay and possibly payment in lieu of holiday where they leave mid year with unused allowances. Calculations here can be complex, so in some instances providers may liaise with your HR representative(s).
Benefits – some benefits may be included in the payroll so ensuring these are accurately identified and calculated is essential.
End-of-year requirements – once you reach the end of the tax year in March, there are additional end of year requirements, including providing P60’s to all employees. A payroll provider will be on top of this whereas if you operate the payroll yourself you may be unsure of what’s needed.
Outsourcing your payroll will help with the above, reducing the risk of anything going wrong and allowing you to rest easy knowing your payroll requirements are taken care of.
3. Improves your employee experience
As mentioned above having a payroll expert take care of things ensures that all the important boxes are ticked and that employees are receiving accurate payslips, with the right deductions.
A smooth payroll experience for employees should not be underestimated! One sure way to annoy employees is to make mistakes with their payslips – stress you don’t need on top of running the business!
Outsourcing payroll also improves employees’ payroll experience, as most professionals will use dedicated payroll software, often providing employees with a portal. This is a secure space for employees to access their payslips quickly and easily. Most payroll software also integrates seamlessly with many auto-enrolment providers and HMRC meaning employee pension contributions are reported timely.
At Raw, we use a payroll system called BrightPay which offers:
- Employee self-service
- A BrightPay App
- Employee records
- Employee calendar
- HR documents
4. Provides you with on-hand expert advice
Payroll regulations and tax laws, which often change annually, need to be adhered to. For example, with the introduction of auto-enrolment some years ago, employers now need to ensure they comply with The Pensions Regulator including declarations of compliance. A payroll service provider will be up to date with the latest updates ensuring you and your business stay compliant and avoid mistakes that could lead to costly penalties. Having a payroll professional on hand means you have an expert you can reach out to with any queries or concerns.
5. Reduces your costs
If you’re considering upskilling employees or purchasing payroll software in-house, using an outsourced professional will come at a fraction of the cost required to recruit for the role internally. Also, the time an outsourced professional could save you means you’ve got more time to invest in growing your business and increasing profit.
Outsourcing payroll wrap-up
We hope our five benefits of payroll outsourcing were useful to you. Please note, when sourcing a payroll provider, you need to make sure you do your due diligence. Research the outsourcing payroll services available and approach only reputable payroll providers.
At Raw our clients work with our experienced Payroll Manager, who acts as an extension of their team, offers on-hand expert advice, and works hard to deliver a smooth and accurate payroll service.
Our Founder, Luke, comments “We know one thing that diverts a small business owner from the role of growing and expanding the company is long hours spent on tasks that could be easily outsourced. At Raw, we save small business owners time and money by offering a range of finance services, including Payroll. Many of the clients who use our payroll service take comfort in knowing their payroll is accurately managed and they have support on hand when they need it.”
To find out about our payroll service head here and if you’d like to talk to us please do book a call.
FAQs for payroll outsourcing
What are the advantages of payroll outsourcing?
As outlined above there are many benefits to outsourcing payroll, including the five points we’ve mentioned above, which are; outsourcing the payroll process saves you the business owner time, gives you peace of mind, improves your employee experience, provides you with an on-hand expert and could reduce your costs if you were thinking about hiring in-house!
Why not to outsource payroll?
There may be good reason to not use a payroll outsourcing provider – for example, medium or large businesses with higher headcount may use an in-house payroll & HR professional to keep all matters in-house.
What’s the cost associated with outsourcing payroll?
The cost of outsourcing payroll is pretty small – our fees start from £8.00 per payslip, including auto-enrolment submissions so for two employees costs are £16 per month. The cost of doing this in house could be much greater where errors arise as it often leads to disgruntled or frustrated employees.
