Running a business involves countless different functions you need to look after and at times it might be for the best to outsource parts of your business. Outsourcing is a common practise these days and you can outsource small bits of your finance management, for instance. Here is a quick look at how outsourcing your payroll works.
What Happens When You Outsource?
Payrolls are currently required to be submitted electronically. The Real Time Information Payroll (RTI) system came into effect earlier this year and dealing with your payroll information can now take a bit more of your time, especially if your business has a number of employees.
There is plenty of software available for managing your payroll. But the software still requires your input and thus this can carve of a large chunk of your day. When you outsource payroll services, you don’t need to spend all that time submitting the information, as the company will do this for you.
All you are required to do is to send the initial information. This includes the employee details such as date of birth, NI numbers and current HMRC codes.
Providing the Payroll Information
After the initial setup, you will need to set up a system for collecting the data on the hours worked and so forth. The way this is dealt with can vary depending on the company you are working with.
Some companies have an electronic system for collecting this information and other businesses collect the data via e-mail. For instance, here at Friendly Accountants we ask the company to provide timesheet details via e-mail and then process the information accordingly.
Generally, the information the company must provide includes details such as:
- Is the pay flexible or fixed and is it paid weekly or monthly?
- What rate is paid by the hour?
- Are there any expenses to deduct?
- Details of possible sick day deductions or holiday pay deductions
- SSP & SMP information
Depending on the specific business needs, this information is processed weekly or monthly. Majority of companies also provide the annual tax return filing with their service.
Do You Need to Outsource Your Payroll?
Naturally, you need to decide whether your business needs outsourcing or not. When it comes to payroll outsourcing a lot depends on your business’ size and the amount of time you have available for dealing with it in-house.
Talk Business Magazine had a great article, outlining the three key reasons why outsourcing payroll might be the best choice for your business. Firstly, it is an efficient way to manage your payroll. On top of this, it can help entrepreneurs a lot since it takes quite a bit of stress off your shoulders. Outsourcing is alsovery cost effective.
So now you know what to expect from outsourcing your payroll. The process isn’t anything too difficult to handle and you will quickly enjoy the benefits of having quite a bit less work on your hands. The key is to spend time finding the right service model for your business and to ensure you go with a reputable company. All in all, outsourcing payroll makes taking care of your payroll a lot simpler.