When it comes to processing your payroll for employees, the associated admin can have a heavy burden on your time and your bottom line, there are a large number of laws and regulations such as RTI filing and auto-enrollment that must be followed and when errors occur it can cost you an extensive amount of money.
One of the main reasons why company should outsource their payroll function is to ensure your business focuses only on its primary activities without spending too much time or money on secondary activities, which are not directly generating profit.
When it comes down to the bottom line, there are huge potential time savings to be made. Instead of spending your valuable time calculating pay, deductions and keeping up to date with the changes in regulations, we can handle all of that for you. This way you can focus on your core business and generating more revenue.
Outsourcing Payroll Saves You Time
Payroll is one of those administrative duties that will not directly increase your sales, and if not followed to the book, it can cause a whole world of trouble with the additional time dedication required and the likelihood of financial penalties.
And worst of all, it will take time and attention away from your core business activities.
Businesses of any size that pay out a wage or salary have to comply with a wide range of laws and regulations. It takes considerable time and attention to detail to deal with them.
There are the obvious legal requirements, such as tax reporting and remittance. There are requirements around withholding taxes from the employee’s pay, and also calculating the employer’s portion of taxes. RTI is the biggest change to payroll in the last few years. Previously a single submission was made at Payroll Year End. Under RTI, a “Full Payment Submission” (FPS) must be submitted every single time you pay your employees.
There is more to it than just taxes and filing though, there are a number of laws and regulations to follow!
When you employ someone, you have to understand the laws for wages and hours. For example you must be aware of what the national living wage is and the working time directive. Then there are workers rights and the different classifications of workers that exist!
Payroll can just be an inconvenient burden and when HMRC ask you for information you may have to go through months of records and bank statements to give them the information they need.
Access to Expertise and Technology
Another benefit of outsourcing your payroll is that you get access to a wide range of expertise and technology.
Employers have to deal with a whole range of taxes; Income tax, National Insurance, Student Loans, etc. These can be at different rates dependant on the circumstances and income level of the individual. We have access to a “Personal Allowance” but once used up you’ll start to pay tax. However, over £100,000 you’ll start to lose that allowance. Employee Class 1 NIC’s are only paid above £166 a week but Employer Class 1 NIC’s are due on everything. Then Student Loans have different repayment thresholds for Plan 1, Plan 2 and Postgraduate loans. It can just get messy!
It’s important to have a provider that understands these issues and the right way in which they are administered. The last thing you want is to get a large tax bill at the end of the year or to find out you’ve been paying too much tax for years and have to argue with HMRC to get it refunded!
Whilst expertise is important, so is new technology. Employers today rely on technology to operate more efficiently and with more automation. As a business grows, employers have more employee records to keep and also need to report more. A lack of technology becomes a hindrance to scaling for business growth.
Having access to HMRC compliant software allows this to be calculated for you. You just input the information required and it tells you what the Employee/Employer taxes are, and what the net pay is. It certainly makes things so much easier and you can even have your payslips emailed to you or accessed online!
Need Payroll Help? Contact us now!
We can offer outsourced solutions for businesses as small as one employee. With our low affordable prices, we can free up your time so that you can focus on your core business.
Get in contact now for a free quote! Email us at firstname.lastname@example.org.