Payroll Outsourcing Companies
Payroll is beyond categorisation. It falls naturally into the realm of neither HR nor of finance and yet its critical nature to any business cannot be overstated. Without it there are no employees and without employees there is no business. Payroll outsourcing companies exist solely to help you solve the payroll conundrum with the minimum of fuss, freeing up key staff to concentrate on the task of doing business rather than doing paperwork.
Finding the right payroll outsourcing company for your business should be a doddle. There exist such a large number of providers, each providing several service options, that exactly the right solution for your company undoubtedly exists. Nevertheless, it’s important to be acquainted with the different types of service that are available and what the pros and cons of each might be for a business of your size and type.
Payroll Outsourcing Companies: An Overview
The reason payroll usually remains unclaimed by any single department is that it lies at the intersection of finance, employment law, personnel management and tax. No one department is expert in all these fields which makes outsourcing to payroll specialists a sensible and attractive option. Not only does it avoid conflict between different parts of the company who each feel that payroll isn’t their responsibility, it also prevents costly and time consuming errors arising from splitting that responsibility. Payroll is too important a business to take any chances.
Whether you’re a small business with a handful of employees based in the UK or a multi-national corporation with employees all over the globe, the right payroll outsourcing company can help streamline your business and ensure compliance with tax and employment law.
Payroll Outsourcing Options
Small Business Solutions
For smaller firms with no trained in-house payroll staff a managed payroll solution is often the best bet. Managed payroll takes over the entire responsibility for your payroll processing and PAYE tax reporting including:
- Calculating payments including wages, SSP, maternity/paternity pay, holiday pay and bonuses
- Processing BACS payments
- Paying tax, NI, union, student loan and pension contributions
- Regular reports
- Answering employee enquiries
- Filing end of year, P45s and P60s with HMRC
- Sending out payslips
- Updating tax codes
With a managed solution the payroll outsourcing company effectively becomes your payroll department., allowing you to relax in the knowledge that your payroll will function smoothly and fully in compliance with the law.
Larger Business Payroll Solutions
A larger business may already have one or more staff responsible for payroll but may be looking to make this process more efficient in order to allocate staff to other, more important projects. A hosted payroll solution provides:
- Up to date software for calculating payments, tax, NI and other contributions
- Processing BACS payments and sending out payslips
- Providing support to your payroll staff
- Filing all relevant forms with HMRC
A hosted solution relieves your payroll staff of all the heavy lifting, cutting the time and therefore the cost involved in processing each month’s run. You’ll still have payroll staff to whom you can address your queries and who will remain on top of the data but their lives will be considerably easier.
Global Businesses
Organisations with staff in several countries need a payroll outsourcing company with the capacity for managing compliance issues in several different regions at once. A changing business environment may also require that the company charged with managing payroll can incorporate mergers and acquisitions and other organisational restructurings into their regular operations with the minimum of fuss. Payroll outsourcing companies with global payroll services (sometimes known as BPO payroll) can do all this and more, reacting quickly and with trans-national expertise to the most rapid and specialised business developments.
Temporary Solutions
If the member of staff normally in charge of your payroll needs to take an extended leave of absence, perhaps due to illness or parenthood, or your company’s immediate future is suddenly rendered uncertain for financial reasons, you may need to arrange a temporary solution to your payroll processing needs. Many payroll outsourcing companies offer a pay-as-you-go payroll solution which, while more expensive than a contract based service, allows the flexibility you need during exceptional times.
Choosing between Payroll Outsourcing Companies
The size of your business and state of your current payroll department will determine which of the above service types is most appropriate for your business. However, the above is only a rough guide and you should bear in mind that many companies will offer a range of the above services or fall somewhere between categories. As such, a business looking to outsource payroll provision is spoiled for choice. Once you’ve uncovered a few contenders among this embarrassment of riches, the following considerations may help you to choose between them:
- Number of employees: Some payroll packages have minimum and maximum numbers of employees that they can deal with. Think carefully about whether your business is likely to expand over the term of the contract.
- Contract length: A typical contract will run over a 12 month period. You may be offered a better rate for a longer term but will this provide the flexibility your company needs?
- Termination clause: The current business environment can be hostile to small and large firms. If the unexpected happens you don’t want to be stuck paying out large sums for a payroll service you don’t need.
- Extra charges: Will you be charged for software updates, tax code changes, P45s or P60s, end of year filing? Make sure all charges are included in quotes.
- Trouble-shooting: If something goes wrong, does the contract have a provision for fixing it within a specified time-frame?
- HMRC accreditation: The software a payroll outsourcing company provides should be of HM Revenue and Customs’ ‘Payroll Standard’, ensuring compliance with UK law.
Beyond Payroll Outsourcing
Once you’ve employed a payroll outsourcing company remember to perform regular checks on their performance and, if they’re providing a fully outsourced solution, get feedback from your staff on how they respond to queries and problems. Poorly run and error-prone payroll processing can have a deleterious effect on staff morale which can have huge long-term consequences. Reviewing the performance of your providers yearly can help you identify problems early and nip them in the bud.
An efficient and well administered payroll operation, on the other hand, not only saves your company time and money but frees up the talent of your staff for application to tackling the real challenges of the business. Payroll outsourcing companies are your allies in the fight against mediocrity in the workplace.
