As a business owner, you probably start your day with a million and one things on your to-do list. From the moment you wake up, it’s full steam ahead with little time to think about anything but your business.
If you employ staff below you, an added worry to your list is ensuring that your payroll is monitored and that the staff you employ are being paid the right amount and on time. Keeping on top of your payroll can be incredibly time-consuming, and there can be detrimental consequences if a mistake is made.
This is why so many businesses are outsourcing their payroll, as it can save them substantial time and money. At Tax Driven Accountants, we have helped countless businesses take control of their payroll, and in this guide, we will explain exactly why you should outsource yours.
The True Cost of In-House Payroll
One of the main focuses of business owners is trying to save as much money as possible and to invest wisely in their business. Many business owners will attempt to do everything in-house to save money, but they often cost themselves more.
In-house payroll isn’t as cost-effective as you may think, and some of the reasons for that include:
Time Investment
There is a misconception that when you manage your payroll, you just have to click a button and pay everyone the set wage they should expect every month. However, many factors change every month, such as deductions, holidays, and even sick days.
This means that you will have to spend hours each month calculating the correct wages to give to your employees, and as you are likely more than aware, time costs money. The time spent working through all of the technicalities of payroll, you can spend more time focusing on the things you really care about if you outsource your payroll.
Hidden Costs
If you attempt to undertake payroll for yourself simply to save money, you need to be aware of the potential hidden costs you may face.
Gone are the days of managing your business’s finances on pen and paper; HMRC expect to see up-to-date, digital records, and so you’ll definitely need to use software to help you if you don’t have an accountancy background.
This software can save you a lot of time, but it usually requires a monthly subscription and can be incredibly costly. You still have to input some of the data yourself, so there is no guarantee that mistakes won’t be made, which will incur additional costs for correction.
Risks of Error
When you take the lead with your payroll, you must be incredibly vigilant and aware of any mistakes, as it can be really easy to make mistakes without even realising. You could face a penalty if you make mistakes in the PAYE for your payroll.
Not only does this mean that you will receive an additional financial burden, but you will then have to overcome the stress of facing the consequences of any penalty. With an expert team of accountants on your side, you don’t have to worry about your payments not being compliant.
How Payroll Outsourcing Saves Time
As a business owner, it can often feel like you don’t have enough time in the day, and if you add payroll to the equation, you’ll have little to no time. Some ways that outsourcing your payroll can save you time include:
Frees up Internal Resources
Depending on the size of your business, you may simply not have the staff and time to include internal payroll. If you have a finance team, if they’re not focusing their time on payroll, they can strategise to help grow the financial side of your business and expand it.
Outsourcing your payroll to experienced professionals can save you time and significantly boost your business efficiency.
No Need to Keep up With Legislation
In the UK, employment laws are undergoing major changes, which are impacting businesses’ tax contributions, employee pay practices, and pay processing.
The legislation in this area changes quite frequently, and unless you put yourself in a position where you can stay informed and up to date with these changes, it is likely that you will miss out. However, keeping up with such an ever-changing industry can be very time-consuming, and that is one of the main reasons why it is recommended that you outsource your payroll.
Your Payroll is Processed by Experts
If you lack expertise in something, it will understandably take you longer to do it, but there are strict deadlines for ensuring your payroll is in order and the necessary information is forwarded to HMRC.
When working with an expert, you know they will process your financial information efficiently because that’s their area of expertise.
How Payroll Outsourcing Saves Money
When you outsource your payroll, it will, of course, incur a cost, but if you compare it to managing your payroll in-house, you might find that you could actually save money. Here are some ways you can save money through outsourcing payroll:
Fixed Monthly Costs
When you outsource your payroll, there is no guesswork about how much you will pay for the service. At Tax Driven Accountants, once we sign a contract with a business, they pay a set cost for our services without the worry of unexpected expenses being added to their bill.
However, if a business owner chooses to handle its payroll alone, it risks encountering unexpected costs and making mistakes that require later revision.
Reduced Risk
One of the biggest benefits of outsourcing your payroll is that it helps reduce errors, prevents expensive penalties for non-compliance, and guarantees your staff are paid correctly and promptly. This enhances the efficiency of your business operations and provides reassurance that experienced professionals are managing your payroll.
Cutbacks on Subscriptions
If you choose to handle payroll in-house instead of outsourcing, you’ll need to subscribe to payroll software to manage it effectively. However, outsourcing your payroll means you won’t need to pay for these software subscriptions, which can save you money.
Scalable Solutions
Payroll outsourcing providers offer scalable solutions that grow alongside your business. Whether you’re hiring new staff, modifying pay structures, or implementing new benefits programs, accountants can easily adjust to meet your needs.
Additional Benefits of Outsourcing
If we haven’t already convinced you, some additional benefits of outsourcing your payroll include:
GDPR Compliance
Payroll providers are specialists who are trained to manage personal data in line with current legislation. They have policies, processes, and safeguards in place to ensure every piece of employee information is handled correctly and confidentially.
If you are a small business in particular, it can be difficult to establish a foundation to ensure GDPR compliance, which can lead to mistakes. That’s why it’s recommended that you work with an external company to help with your payroll.
Expert Advice When Needed
Managing your business finances can be difficult and overwhelming at times. Access to support, whether through professional assistance, software tools, or financial consulting, can greatly enhance your financial health and stability. These support systems help simplify complicated processes and assist you in making informed decisions, which promotes the long-term success of your business.
Employee Payslips Taken Care of
If there is something that all businesses want to avoid, it’s upsetting their staff. Your staff deserves and is entitled to receive their pay on time, and also have a full awareness of the pay that they’ll receive.
If you make any errors or don’t outline exactly what your employees are entitled to, this can cause internal tension. When outsourcing your payroll, you have the confidence that your payslips are being taken care of in a timely and error-free manner.
Find Out How Tax Driven Accountants Can Help You
In this guide, we hope to have outlined the importance and the benefits of outsourcing your payroll to expert accountants.
At Tax Driven Accountants, we are not only passionate about providing quality accountancy support, but we are equally as passionate about making our client’s lives just that little bit easier. If you are a business owner looking for financial advice or help with your payroll, get in touch today.