Outsourced payroll
Business Link information regarding outsourced payroll states that
"There are many providers that can offer you an outsourced payroll service. Most accountants offer a payroll service. Some may even run a specific department that deals just with this.
It might make business sense to ask your accountant if they can provide you with payroll services. They'll already be familiar with your business and might offer you a competitive rate as part of a package of services. Alternatively, you could outsource your payroll to a payroll agency.
Either way, you can normally specify the level of involvement you want from them. For example, you may choose to completely outsource your payroll or you may simply wish them to provide you with your weekly/monthly payslips.
However, before handing over your payroll operations, you need to consider:
- whether the service provider can tailor a suitable package
- whether they're experienced with your type and size of business
- whether they can supply weekly/monthly payslips, and provide weekly, monthly and annual returns
- the charge for setting up the payroll system
- the charge for administering the system
- whether the fees include making all the types of deductions
- whether they charge any additional fees
- how easily scalable their service is - eg, if you take on another employee
- what software they use - whether it's HM Revenue & Customs (HMRC) accredited, whether it's compatible with software you use, and whether it keeps your records in a format that will allow for easy online filing of your Employer Annual Return (form P35 and forms P14)
Checklist - using an outsourced payroll supplier
Outsourcing your payroll to a third party will generate another overhead for your business. However, you might feel this cost is justified by the time and money that is saved through reduced administration costs and paperwork. Outsourcing your payroll can also make savings by:
- allowing you to concentrate on other areas of business
- reducing employee overheads as you'll no longer need to employ a payroll specialist
- improving the accuracy of your systems as they're likely to be computerised
However, to reap these benefits you need to make sure that any contract you agree with an outsourced payroll supplier is written carefully. Make sure that you:
- specify that they'll calculate tax and deductions accurately, given the information supplied
- state that they'll make these deductions to your specific timescales
- agree that they'll ensure mandatory requirements are completed or met within the regulatory timescale required
- stipulate that in the event of their failing to comply with these requirements, provision is made for them to reimburse you for any resulting penalties
- specify that they'll keep the necessary records of any taxes and deductions as required by HMRC
- spell out that any additional payroll charges you might incur should be specified
- specify that some provision is put in place for any future expansion of their service
"
More on financial Outsourcing
Finance - Payroll Services
Used Car Parts