Payroll Outsourcing Guide

Posted on 01 July 2011 by Noreen Munro

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Buyers Guide to Outsourced Payroll Services

Many leading UK businesses now choose to outsource their payroll functions. They are only too aware that although payroll outsourcing may seem like an additional expense, they are actually reducing their on-going overheads. If they elect for a fully managed payroll solution, there will be no need to recruit a payroll specialist to look after their payroll. This has savings in employee wages and on-costs (such as employer's NI, pension, benefits etc). Costs are also reduced as there is no longer the burden of expensive payroll software.

However, when opting for payroll outsourcing, it is important to consider the following:

  • Is it a fully managed service? If not, then you may still need to recruit your own payroll staff to handle a small portion of the payroll processing.
  • Will the payroll bureau be prepared to chase department heads for missing overtime sheets e.t.c. as you would expect this from an in-house payroll department.
  • Can the payroll company tailor their packages to suit your needs? E.g. Are the reports provided standardised, or can they be designed to your requirements?
  • Is the payroll service scalable? Can they adapt to changes in your workforce?
  • Does the payroll bureau have experience in your type and size of business? (It's best to choose an payroll company that has experience in a wide range of industries).
  • Can they provide payslips on a weekly/monthly/fortnightly/lunar basis, depending on your company's pay cycle?
  • Does the payroll company charge a set up fee?
  • Is the payroll bureau up front about the on-going charges? (Do they charge on a per payslip basis? And do they have any additional costs?)
  • Will the provider administer your company's payments and deductions to the timescales required?
  • Will payments of PAYE, NI etc be made to HMRC on your company's behalf and in a timely manner?
  • Does the payroll bureau use a reputable HMRC accredited payroll software package and can it produce the necessary data for your accounts team?

The majority of UK businesses find that they save valuable time, costs and resources by outsourcing their payroll and they also benefit from payroll specialists who have vast experience across many different industries. However, it is vitally important to choose who administers your payroll carefully as if your payroll is incorrect, your employees, the most valuable asset to any successful business, will become disgruntled and therefore less productive.

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