Everything you need to consider with regards to outsourced payroll as a small business

The idea of letting go of a part of your responsibility as a business owner can be daunting when you’ve single handedly built said business from the ground up. But, the most successful business owners have learnt that delegating tasks is what cultivates success.

One of the first responsibilities people look to delegate due to the ease of doing so is the management of accounts, finances and payroll.

Why? These are time-consuming tasks if you’re inexperienced and also require a lot of expertise to ensure a, the business runs smoothly and b, employees get paid correctly and on time.

If you’re a small business and you’re considering outsourced payroll but you’re not sure where to start, fear not! We’re here to show you how outsourcing payroll could be the first step of delegation to free up your time and energy.

What is outsourced payroll?

Outsourced payroll is the process of hiring a team of specialist payroll providers to manage payroll on your behalf.

Outsourcing your payroll includes passing over deferment elements of your payroll, which you will be able to decide on with your chosen provider.

It can be as little as or as much as you choose. Often, it encompasses the production of payslips, providing of monthly payroll reports, completion of year end reports and filings, and even the submission of payments to employees.

Why should you outsource payroll?

When you choose to outsource your payroll, you are granted more time to focus on the bigger business picture and obtain the peace of mind that there is an experienced payroll professional supporting you.

But, you also:

Save Money

The idea of outsourcing may seem costly, but this isn’t the case. First of all, consider how much your time costs you, or if you would hire an in-house payroll team, how much would the hiring and training process cost? Also, there’s the cost of the software and technology needed to host the payroll process.

When you look at it this way, outsourcing your payroll is actually more cost effective. You are paying for a full service, which includes the latest technology, expertise and guaranteed compliance without having to invest in these costly things yourself.

Save Time

Let’s be honest. As a small business owner, you have 101 things on your to do list at all times. Rushing around to get your payroll done leaves room for error, and errors can be costly.

Not only does outsourcing mean you get accurate payroll every time, but it means you can put your business brain to more pressing matters that can help with growth.

Are guaranteed compliance

Compliance is one of the biggest challenges when it comes to payroll. Laws and regulations are constantly changing, and keeping on top of these changes is a job in itself.

From GDPR to taxation, to correct wages, remaining compliant is vital as an employer because any slip up could have damaging repercussions.

Your outsourced payroll provider will be committed to understanding changing laws and regulations and thus, keep your payroll in line with regulations. As industry professionals, they have the resources to understand and implement any necessary changes quickly and efficiently, so you don’t have to pull your hair out when you can’t find the right changes on the HMRC website.

When does your business need to outsource?

Of course, there are benefits for all shapes and sizes of businesses to outsource their payroll, but at what point should you seriously consider outsourcing your business?

Whilst every business has different needs and circumstances there are a number of indicators that it may be time to outsource your payroll:

  • Your team needs to focus on other business tasks
  • You do not have the in-house capacity
  • You’re unsure how to keep your business compliant
  • You are looking to optimise your HR processes
  • You want a consistent payroll

The truth is, you can choose to outsource your payroll at any time. The benefits of doing so may be personal to your own business and working style – whatever helps you to optimise your business’s operations.

What functions of payroll can be outsourced?

The great thing about outsourcing your payroll is that you are able to choose the functions of payroll which you need support with.

When you decide to outsource your payroll to a payroll provider, there is a wide array of functions they can take care of.

These include:

  • Running and calculating payroll
  • Issuing payslips and paying funds
  • Calculating deductions
  • Handling different modes of pay (wages vs salary)
  • Filing government reports
  • Paying employee benefits
  • Handling pension contributions
  • Calculating annual leave and dealing with requests

If you’re considering outsourcing your payroll, it is good to work out exactly what functions you need support with first, so it makes it easier when it comes to choosing which payroll provider to go with. Many providers offer bespoke packages, meaning you can pay for exactly what you need, with no unnecessary add-ons.

How to choose your payroll provider

Once you’ve made the decision to outsource your payroll, the next step is choosing a payroll provider. It can be a difficult decision to make, but there’s no need to overcomplicate the decision-making process.

Firstly, you need to find prospective providers that are reputable, experienced and trustworthy. To find these candidates, look at Google reviews, LinkedIn reviews, and their case studies and testimonials. This will help garner an understanding of the kind of businesses they work with, as well as how recommended they come.

Next, when contacting your prospective payroll provider there are a number of questions you can ask to help work out if they are the right fit for you and your business.

What services do they offer? Do they align with your business’ needs? What are their rates per employee? Is it within your budget? Can they guarantee compliance? Ask what procedures they have in place to ensure your compliance.

It is also good to ask about their previous clients and how long people have worked with the provider. If they have long lasting client relationships, the chances are that they have good customer satisfaction and retention rates, meaning they must be doing something right.

As well as asking, remember to tell. Outline exactly what you require from a payroll provider, and let them explain how they can achieve that for you. If they are able to run with your requirements and tell you a plan straight off the bat, they likely know exactly how to help you.

Can the payroll provider provide you with a demo? This will give you great insight into how they run payroll and can open up more questions for you to ask about their services, giving you a better perspective on how they work.

Line up the pros and cons! Not every payroll provider operates the same levels of service. There is nothing wrong with directly comparing your list of potential providers by scoring them on what they can and can’t do for you.

The onboarding process

Once you have made your decision, there are a number of things you can do to make onboarding them as seamless as possible.

Remember to communicate to your team that you are changing to an outsourced payroll provider. Assure them that this is good for business, outline to them what they can expect to see, and provide time to answer any of their questions.

Your new payroll provider will require data from you to set up their systems. This includes your employee details and rates of pay. Make sure you do this in a timely manner, so the provider has the details as soon as possible and is able to get up and running.

Once everything is set up and ready to go, it is beneficial to do a parallel payroll run alongside your previous payroll operations. This is a risk-free way to ensure everything is set up correctly, so any bumps can be smoothed out before the first payroll run is live.

You can read more about the onboarding process here.

Ready to outsource your payroll?

Small business owners have hundreds of decisions to make a day.

If you are considering outsourcing your payroll, get in touch with us today. We will be happy to answer any of your questions, and explain exactly how we can help your business.

Get in touch at martyn@cheneypayrollservices.co.uk.