How Comprehensive Payroll Services can Benefit your Business

Payroll is a crucial aspect of any business, and ensuring accuracy is crucial not only to employees but also to business owners. More and more often these days, companies are looking to downsize by streamlining their business functions. The question that business owners often face is whether to carry out tasks in-house or to outsource the functions that do not generate revenue or add value to core business activities and are ultimately taking you unnecessary additional time. 

HR functions such as payroll have frequently been taken care of in-house in the past, a greater need for efficiencies has seen many companies gaining the benefits of outsourcing payroll to a managed services provider. 

As a business owner, it is essential to make sure that all legal requirements are official and taken care of in regards to your expenses, wages, and anything related to the finances of your company. Payroll is how you reward and retain employees, compensating them for the work they’ve done. When there are errors due to miscalculation, you’ll wind up with dissatisfied, unmotivated employees.

If you are a business consisting of more than just one person, you may have heard the term ‘payroll’. But, how do you go about organising payroll for your business and how is this beneficial to you?

What is payroll?

A company’s payroll is quite simply their list of employees, this being everyone who is employed and paid by the business. Business owners frequently also use the term payroll to refer to the following:

The amount of money which a company pays to its employees

This is a reference to every employee who receives  full wages including any bonuses and not including any deductions, these amounts will be tallied up and the total will be used as a part of the account record.

The company’s full listing of employee’s salaries and wages, bonuses and taxes

A detailed account of all money paid out to each and every employee must also be recorded. For some this may involve tallying up the hours they have worked, hourly wages or salary and any extra payments which have been made to an employee. Many companies use timesheets, rotas and even clocking in machines to keep a record of times and hours that have been worked within a week. It is also highly advisable to take note of how many sick and holiday days your employees have had.

The department which calculates and pays employees

In some cases, companies will have a specific department in the business which will organise the payment of employees. Within a business, the department is frequently referred to simply as ‘payroll.’

Payroll advancements

Payroll and the methods surrounding it  are ever-changing and developing. This is partially due to alterations in requirements from the government, but also to try and make the process as accessible and easy as possible for companies. New, regulations and expectations entail that it is crucial as ever to keep track of what is happening within your company, you need to ensure that finances are in order and controlled in order to succeed.

These days with plenty of opportunities to move around in their careers, many people are choosing to stay in one job for a much shorter amount of time. With this in mind it’s important to keep employees happy by maintaining that their payments are correct and on time.

Mistakes are unsurprisingly, highly satisfactory from an employee point of view and when it comes to HM revenue & Customs, so it is important to keep up to date with how payroll is progressing.

So, how has the payroll process advanced over the years?

Below in chronological order are the payment methods businesses have used over time, showing the development in laws, requirements and expectations for the government and for businesses.

  • Cash payments
  • Handwritten cheques
  • Printed cheques
  • Manual direct transfers of money into employees’ bank accounts
  • Online direct deposits into employees’ bank accounts

 Maintain a sense of control in the business

A great deal of business owners fear that outsourcing work will result in a loss of control in regards to business. However, with a managed payroll service – you can still have control in regards to the day-to-day running of your business, this is due to the fact that with a managed payroll service, you are able to select which functions you want to handed over, and which ones you maintain in-house – if any.

You shouldn’t look at this as an all-or-nothing kind of deal, more so a flexible and scalable partnership that is designed to help you in managing your services. You can delegate what you wish the third party to carry out, ensuring it gets done without having the time consuming task of doing it yourself.

Risk management

As you can probably imagine, payroll and tax regulation can be highly complex, as with any business, you’ll want to control costs in a way that will enhance profit. A managed payroll service will provide you with the flexibility you require to turn your fixed overhead costs into variable cost structures. This is especially significant during an economic downturn: as your business shrinks or grows, the same will invariably happen to your costs. You won’t have to carry on paying a large salary out to a payroll clerk if the workload doesn’t warrant the fixed cost. Moreover, you won’t have to pay for payroll software fees, equipment, and training.

Time saving strategy

As a business when you are not forking out so much money on valuable time on maintaining payroll systems, your business can save valuable time that can be spent on more important factors. Instead of spending hours on manual data entry, researching legislature, and double checking numbers, your HR professionals can focus time and resources on strategy and other critical activities that increase efficiency and productivity and optimise your workforce.

Costs

Larger businesses have the funds to maintain a large payroll department. For smaller businesses, an in-house payroll service is a huge financial drain but you’ll be surprised by the result when you compare that amount to the cost a payroll service provider can offer.

Saves you on training to operate a payroll system

It can often be costly to hire employees with the necessary training to operate a payroll system. For a smaller business where a payroll role is not enough to justify a full-time employee, you may need to use your current staff to train in payroll as an addition to the role they may already have. Your payroll staff will also need to constantly be up to date with the on-going tax procedures and legislation. 

Increase speed with an accounting service

Payroll service providers are specialists in their field, with this in mind, they can process the highly complex payrolls at a great speed, providing a quick turnaround time on your payroll when needs be.

Attention to detail and taxes filed correctly

Payroll mistakes can be stressful and are unfortunately, all too frequent. A good payroll service provider is much less likely to make any glaring mistakes than your in-house staff, you are being charged for their expertise, knowledge and finely-tuned checking procedures that they have in place.

Last tax year, HM Revenue & Customs charged over 28,000 people for tax returns that had been filled out incorrectly, that figure appears to be growing annually, this is most likely due to the complexity of what is required in this process.

If your business’s taxes are filed incorrectly or sent in late, you are going to incur fines, which can build up and increase, and if this is a regular occurrence, your fines could rise even more drastically, indicating  that you will be unnecessarily spending money where you needn’t be. In the worst case scenario, you may even end up owing a lot of money you were not necessarily aware of, having to pay money back at a later date when you may not have the finances due to other investments. With the use of a professional provider of payroll, you can be sure that your taxes will be filed correctly and equally as importantly, sent on time.

Barron & Co Ltd – business accountant services based in Birmingham

Here at Barron & Co we understand that running a business can be highly stressful and two of the most important aspects of running an organisation are: the tight management of resources and the maximisation of business efficiency, this includes the organisation of a company’s finances. We offer accounting services and financial advice to help you to reduce your tax liabilities. So if you are looking for a ‘accountants near me’ and to find out more about the financial services we offer, get in touch with us today.