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Kirk Rice Blog

Payroll – Should You Outsource?Written on October 25, 2018 by Kirk Rice LLP

Payroll – Should You Outsource?
Taxing Times Questions

The Question:

I am a business owner who employs 11 members of staff. Since I took on my first employee three years ago I have run the company payroll myself. I am finding the task more arduous each month and I am increasingly worried about making mistakes. I have heard that some businesses outsource their payroll function. What exactly does this mean and is this a good idea?

Kirk Rice LLP answers:

Payroll outsourcing means that businesses choose to hire a specialist external company to handle their payroll function to save them time and money, gain efficiencies and ensure compliance.

There are many benefits of payroll outsourcing including:

Time saving

If you handle it in-house, you know that it requires a lot of time and attention to detail and that demand on your time increases as your staff grows.  That’s time taken away from the core tasks that help you manage and grow your business.  When you outsource your payroll, you immediately free up all that time.  You can devote that free time to refining sales and marketing strategies and improving workflow efficiencies.

Reduced overhead costs

As a business owner, your time has a value that’s linked to the revenue you generate.  Any time you can save each day is money earned.  With that in mind, think about all the time you spend on payroll tasks every pay period.  If you compare the total time you spend on payroll each pay period to the costs of outsourcing, you’ll see a great deal of cost savings when you take those tasks off your plate.

Data security

Managing your payroll in-house can come with data security risk.  The door is wide open for identity theft.  Aside from these employee risks, you’ll need to consider the security of your payroll software. While the software itself could be relatively secure, you may house your data on a server or network with security flaws, that could leave you open to data theft.

Comparatively, outsourcing your payroll typically means your data is stored on highly secure servers as a standard part of the service.

Compliance

Regulations change constantly, often many times throughout the year, so it’s unlikely that you can stay on top of all these changes when your focus is to run and grow your business.

Payroll mistakes are a very real possibility and can leave you open to HM Revenue & Customs enquiries and potentially costly penalties.  Even though you’re not an expert in the complicated realm of tax regulations, doesn’t mean that you aren’t responsible for mistakes.  You’re still legally responsible for any failure to file accurately with HM Revenue & Customs.

Payroll firms understand payroll regulations.  It’s their job to keep up with the rules, regulations, and changes in tax law. They guarantee accuracy and compliance.

Access to a variety of services

When choosing a payroll provider, it is also important to consider what additional value-added services can be provided by the organisation.  Aside from the standard payroll service it can be an enormous benefit to have access to HR advisors, tax specialists and financial advisors within the same organisation.

You can save yourself a lot of time, money, and headaches when you outsource your payroll, so you can get back to growing your business.

We are delighted to introduce Pam Payne who has recently joined Kirk Rice LLP as senior payroll manager.

Pam is CIPD qualified and has a wealth of payroll and HR experience. She has spent many years working within the payroll bureau of a large accountancy practice and as such we look forward to Pam working with Nina to drive the payroll department from strength to strength. Pam is looking forward to familiarising herself with existing clients and also facilitating the on-boarding of new clients. No payroll is too big or too small.

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Any reader interested in discussing this topic, can telephone Pam Payne on 01252 960 500 in our Fleet office. You can also email info@kirkrice.co.uk.

Please note: answers are given for general guidance only and specific advice should be taken before acting on any of the suggestions made.

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