In-house payroll is when your company has an internal department that deals with the payroll process for the organisation. These people are your employees, and are paid through the same payroll system that they manage.
In-house payroll staff will usually be in either your HR or finance departments. Their roles will include preparing and checking payroll data and performing the full calculation of the pay run. The duties will also include making returns to outside bodies like HMRC, pensions providers and courts, as well as making payments and distributing pay advices. Having your own in-house payroll team means you’ve got the control and flexibility to make both any opportune changes and better decisions.
When you outsource payroll, your organisation hires a payroll outsourcing company to carry out its payroll functions. The solutions these firms provide will range from a basic service to taking on tasks such as liaising with HMRC and maintaining compliance with payroll and employment legislation and the full delivery of the payroll service. A great outsourced payroll service makes you feel the outsourcer is your own payroll team while reducing your costs and time. You can usually customise the level of outsourced payroll support that the supplier provides you with.
Whether UK outsourced payroll is a viable option for you will depend on the complexity of your organisation’s payroll requirements, and the expertise that’s available in your organisation. There will be some businesses where this choice will save them time and money, as you won’t need payroll staff nor the software packages required to carry out such tasks. You also won’t need to worry about keeping pace with the latest pay legislation.
Advantages of in-house payroll
So why might you want to keep your payroll in-house? For starters, you’ll have more control over payroll processes and their management. Your payroll staff can either adapt the processes you currently use, or they can help you develop a system that better suits your needs. And you can also resolve any issues that occur swiftly and easily, and make any required changes straight away.
You might also find it easier to complete the payroll process. Once your calculations are made in your reports, all you need to do is follow your payment steps. If you need to make any adjustments, these can be done off-cycle so you can address any issues and remit the correct total before the due date.
Having control of your payroll services means you have easy access to your payroll history and information , too. If required, your trained accountants can check these details and identify any points that can help you reduce your payroll costs – and your tax liability.
The size of your company will also be an important factor in your decision. If you run a small- or medium-sized business, for example, then you may find your payroll needs can be fulfilled by a a member of the HR or finance team. For organisations with thousands of people, what you spend on payroll processing will be divided among a larger pool – lowering the per-employee cost, and making the decision to hire someone internally far easier.
If you decide to run your payroll in house, make sure you choose payroll software that supports your goals, fits with your organisation’s processes, and is integrated with your central HR system.
Advantages of outsourced payroll
If you always feel you haven’t got quite enough resource to complete all your payroll-related tasks, then having your payroll outsourced may be for you – as saving time is one of its many benefits. The payroll bureau you use will calculate pay on your behalf, make any deductions, and keep on top of the latest tax legislation – use our outsourced payroll calculator to get an idea of how much you might be able to save by outsourcing your payroll.
You’ll know you’ll always be compliant when it comes to your payroll data and information. And, not only will you have an easy-to-use payroll service, but you may have access to a range of additional solutions, too, which will boost your business efficiency further, for example, P11d reporting of benefits to HMRC at tax-year end.
Remaining compliant with current legislation can be a daunting task for small- and medium-sized businesses, and your payroll service will need to have an in-depth understanding of these payroll rules (plus those that apply to employment, tax and other areas). So outsourcing payroll to a service provider means you can delegate such tasks to a supplier that has knowledge of these complex rules – and can help you avoid any penalties and audits that could be prompted by your non-compliance. Such companies will also support you in getting a greater understanding of payroll legislation.
Working with payroll outsourcing companies also gives you instant access to payroll experts with years of experience, should you need extra support with complex situations.
And, because they’re experts, the risk of any omissions, errors or late submissions of payroll tax submissions are low. When searching for suppliers, you’ll need to ensure they have a good reputation and use HMRC-recognised software.
Another benefit of choosing to outsource your payroll is you don’t need to worry about recruiting, training and retraining staff with these skills. You won’t have any concerns over staff absences, either, as there will always be someone available to deliver your payroll.
As you’ve got a supplier dealing with this process, you won’t need to buy or maintain your own payroll system because this will be done on your behalf. Many payroll outsourcing firms, such as Ciphr, have their own payroll management software – so that’s another decision-making process you won’t have to undertake. Your outsourced supplier may also provide online platforms for the submission of data and an employee self-service portal for payslips, P60s and other documentation.
So what do you do with all this extra time and money you’ve got now you’ve outsourced payroll? This gives your HR team the time to focus on strategic goals such as improving your employee experience, and supporting staff’s learning and development.
If you decide to use outsourced payroll services, then it’s essential the option you choose is an HMRC-recognised, Microsoft tested, ISO 9001 and ISO 27001 certified supplier – such as Ciphr Payroll.
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