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When you outsource your payroll, what exactly do you outsource?

If you’ve landed on these pages in the past, you’ll no doubt have read why outsourcing your payroll is a good idea. We’ve spoken (rather a lot) about how outsourcing reduces the risk of error, how it helps you stay compliant with new legislation, and how it can cut the cost of processing payroll for businesses of all sizes.

But what does ‘outsourcing your payroll’ actually mean?

What’s included in payroll outsourcing?

In truth, each payroll provider’s offering varies a little – but you can expect your outsourcing to include:

  • Paying your employees on time via BACS or similar (and issuing paper or e-payslips)
  • Calculating employee payments each month, including more complex payment arrangements for overtime, sickness, maternity, paternity, IR35, student loans etc.
  • Making ad hoc payment runs for new starters, leavers etc
  • Staying up to date with new payroll and tax legislation and either implementing the changes or alerting you if there’s something you need to do
  • Submitting documents to HMRC
  • Year-end processing and issuing P45s, P11Ds and P60s
  • Backing up and securely storing data

What’s not included in payroll outsourcing?

There is, inevitably, some work that needs to stay within the business. You’ll need to tell your payroll provider about new starters or leavers (because no payroll company is psychic). You’ll need workers to log their hours and managers to sign-off on those timesheets (although, if you do that electronically, that can be a simple process). And if you use contractors, you’ll need to make a decision about whether they fall within the scope of IR35 or not (and as we’ve seen, that’s not always easy).

Additionally, and only for a short period when setting up the payroll, a provider will ask you to run a dual payroll (i.e. using the new system and via your traditional method) to make sure the two are consistent.

That aside, however, outsourcing your payroll really does leave you free to get on with the day job. Better still, it enables the people who used to spend lots of time processing payroll to do something more productive.

Discover the difference outsourcing your payroll could make to your business. Talk to our experts now.

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