All companies, whether they employ 10 or 10,000 people, must have a payroll solution to legally pay their employees.
There are various solutions available and the right one for you is derived from statutory legislation, conditions of employment, employment benefits and third-party deductions. Whichever solution you choose it must either assist you to carry out all payroll related duties and responsibilities or carry them out on your behalf.
The importance of payroll boils down to one thing; that your employees are paid on time. This is likely the most important financial transaction of your business. You can have money coming in, but if you don’t pay your employees what and when they should be paid, your workforce will quickly up sticks.
It is important to find the right solution to meet your needs and there are basic functionality and a basic set of data fields all payroll systems must include. The following solutions are the most popular and are employed in abundance to meet the varying types of employers:
- In-house payroll service using an “off the shelf” payroll system
- In-house payroll service using a “bespoke software” payroll system
- In-house payroll service using a “commercially managed “ payroll system
- An outsourced payroll service
In-house payroll service using an “off the shelf” payroll system
Doing your own payroll using an “off the shelf” system could be the cheapest solution. The software license for a less sophisticated but flexible “off the shelf” system can be as little as £500 per annum. Maintaining the annual license fee will guarantee your system received all the latest updates on government legislation and HMRC amendments.
Apart from the software licence fee other costs will be either to employ an experiences payroller or to learn to do it yourself. The second option would need your time to learn to operate the system and to familiarise yourself with pay related legislation. Many of the systems assist you with meeting legislation requirements, but you will need to keep already of the on-going changes.
If you opt for this solution, make sure you choose an easy to use system which also offers a prompt support service. Remember, payroll is time critical and you may need help immediately. Additionally, you will need backup for the data files and for your payroll expert. Other costs will include banking changes for transferring the pay into your employee’s bank account.
In-house payroll service using a “bespoke software” payroll system
This option if virtually the same as the first solution but it most likely only to be used by a larger employer due to the relatively high technical cost associated with building and maintaining a bespoke payroll system. This option should not be necessary for the most complex payroll requirements.
In-house payroll service using an “commercially managed” payroll system
This solution is very similar to the first solution except you will pay a third-party provide to use their payroll system. The benefits of this are that you are paying the third-party provider to run and maintain the payroll system. You will input the data into the system online and the third-party provider will run the payroll.
The provider will offer add-on services, such as transferring the payment to your employees on your behalf, write bespoke reports and send you notifications of the latest legislative changes and the annual HMRC changes. This can appear to be an attractive solution. Make sure you understand the total charges as the add-ons can make a big difference to your total cost.
With this solution you are paying a third-party provider to take full responsibility for running your payroll. They will offer a prompt service ensuring that the current HMRC, auto enrolment conditions and other legal responsibilities are met. They will offer you peace of mind that all your payroll related issues are compliant with the current legislation. Remember, you must still provide the information in a timely manner to enable your payroll provider to meet the payroll deadlines.
Some of the bigger providers now have their operations based overseas, which may cause delays in resolving issues. Many payroll providers offer a basic set of process with an array of add-on services. Make sure you know the true costs of their full payroll services.
There are many payroll providers offering a full managed service and then include software companies, banks, financial bodies, accountants, and specialist payroll service providers. Some of the professional bodies are among the most expensive.
All four of the above options have their benefits but as it all cases, as far as the legislation is concerned, “the buck stops with the employer.” Whichever solution you choose, make sure it is one you are confident with and that it ticks these three boxes:
- Covers all payroll related statutory obligations
- Meets your operational needs
- You know what it is you are getting for your money
Bigmore Associates Payroll & Pensions
Our payroll team has over 50 years of experience in the industry having been there for the transition from fully human powered to the developments in technology that have all but automated the process. We have experience managing in-house services, outsourced services and as a provider of outsourced services. This experience lays the groundwork for the systems we have in place and form the basis for why we know that Bigmore Associates is a suitable choice for any company, regardless of size and budget.
If you would like to know more about our service or to speak to one of our team about how we can provide the right payroll solution for you, fill out the contact form below.
Article by Maurice Nettleship