Statistics released by the Department for Business Innovation and Skills show that private sector businesses currently number approximately 4.5 million. Most of these businesses are one-man operations that have no other employees. For the 1.2 million businesses that hire employees, payment of staff is a major priority.
However, it is sadly not as simple as doing bank transfers each month. Laws exist that dictate the amount of tax as well as national insurance to be deducted, how the issuance of pay slips should be done and the records that should be kept should the taxman ever come calling. All these requirements come together under the title ‘payroll.’ Small businesses can approach this issue in a variety of ways.
For many businesses, outsourcing is the easiest way to manage payroll responsibilities. Outsourcing payroll responsibilities to dedicated businesses such as eBOs helps to free up time and make sure that you are in full compliance with the current legislation.
Knowing that the payroll is in the hands of a specialist takes an enormous amount of weight off your shoulders. Fast growing businesses, in particular, prefer outsourcing their payroll since they have many other things to focus on.
Communication is another important factor if you choose an outsourced company. You need to be ready to communicate with them on a regular basis but it should never be onerous. All that is needed is for you to inform the payroll company anytime somebody has been promoted, leaves, does extra hours, or if something such as a long-term absence happens. All these have the potential to affect salaries and it is important that everyone is paid his or her right dues.
Managing Payroll In House
Many small businesses opt for managing their payroll in-house as opposed to outsourcing. The downside of this is that it takes the time or a dedicated staff member to take care of everything effectively. The good thing is that it helps to reduce external expenditure. In smaller firms the director often takes this on but once the firm grows it may be necessary to expand this to a dedicated team.
The person responsible for running payroll should have an up to date knowledge of PAYE tax systems, NI along with other forms that have to be sent to HMRC. The person implementing payroll in-house also has to inform HMRC when an employee starts and leaves.
Payroll is a complicated task that needs much knowledge and an aptitude for numbers. Always bear this in mind when choosing your in-house payroll manager.
Digital Payroll Systems
Digital payroll systems have been released in the recent years that can help to get rid of a huge chunk of the manual labour. A good payroll system should be capable of performing calculations based on the input data, generate pay slips, send returns to HMRC, and print P60, P45 or any other forms for employees. It can be tricky to learn how the programs work and the kind of data that needs to be uploaded but it is essential if you are dedicated to forging ahead and doing your payroll in-house.
You will find digital payroll systems as either downloaded software tied to a particular computer or as an online portal that you can access from anywhere. Should you opt for this route, you need to consider how the information in the payroll system will be transferred to the accounting system. Will you have to manually input them or can you find a payroll system compatible with the accounting system to help in streamlining the process?
Keeping Up With The Legislation
One of the greatest challenges for businesses that choose to run their payroll in-house is having to keep up with the constant changes in the regulations and legislation. Software packages have to be updated constantly watching out for changes.
It is hard to fail to understate the importance of support and research in a good payroll solution. If you discover any technical issue preventing you from paying employees, having a specialist at the end of the line ready to answer any questions you have is critical.
An outsourced payroll solution will ever be up to date on legislation, will have an understanding of how to implement them and the ways in which they affect your business right from the start. However, managing the payroll in-house the heavy responsibility fall upon your designated payroll staff or yourself.
Regardless of your choice of payroll management, it is important to be sure that it is the best option for you. Errors with the payroll can be expensive, so it is important to find a solution that will suit your business.
For additional information on the ins and outs of payroll or to receive your ‘no obligation’ quote about outsourcing of your payroll solutions, hurry up and contact eBOS today for your consultation.