How much does it cost to outsource my payroll?

First published: 2/8/22

Last Modified: 2/8/22, 4:21 PM


Finding the right fit in a payroll provider is crucial, as they will be an extension of your business as they deal with your payroll, employees, and be acting on your behalf with organisations such as HMRC and The Pension Regulator. They will have a key impact on keeping your payroll compliant.

Typically, costs can range from £2 to £8 per employee per pay period.  This depends on a number of things; number of employees on your payroll, your payroll frequency (Weekly/Monthly) and what’s included within the fee.

When being quoted for payroll services it’s important to check what’s included in the fee.  Then you can compare quotes from different payroll providers and know if it’s the service you need, much easier.

Do the fees include, or is there an additional cost for…?

  • Initial set up of the payroll
  • Setting up new starts
  • Processing leavers
  • Pension auto-enrolment administration
  • Assistance with answering employee queries
  • Adhoc queries/tasks outwith normal processing of the payroll (make sure you get a definistion of what's considered as 'outwith normal processing')
  • Updates on changes in payroll legislation
  • Holiday pay recording and calculations
  • Do they process the payment to the employees, HMRC and 3rd parties?

 

Other important things to consider when comparing costs for outsourcing your payroll are;

  • How important is your time? 

There’s flexibility in how much of your payroll you outsource, and this will have an impact on the price you pay for outsourcing it.  Say for example, if you manage the pension administration yourself, then this will reduce the cost, financially, of getting your payroll processed by an external provider, but will cost you time to complete the task and know the necessary legislation and processes to complete the task accurately and on time.

  • How much do you want to be involved with the day to day running of your payroll? 

As a small/medium employer, you are dealing with so much in the day to day running of your business.  Running payroll and dealing with the legislation and procedures involved takes time, knowledge of the legislation and can be stressful.

  • What are the processes and procedures of the payroll service provider? 

It’s great getting a low fee for processing your payroll, but if it comes at a cost of accuracy and of service, that will cost you more in the log run.  How robust are the payroll providers procedures for checking and reconciling what they’re processing?  Will they keep an eye on what’s coming up and give you advanced warning of things like your 3-year pension re-assessment/re-declaration of compliance?  Will they continually strive to improve their procedures and yours for the payroll, making sure time is used effectively and retaining accuracy.

  • What are the payroll providers reporting capabilities? 

Different payroll software’s have different capabilities.  If you only have a few employees then basic reporting, summary, P32, Payslips, pension, will be sufficient, but as your employee numbers grow it might be handy to be able to get more specific reporting, like a Cost Split report which enables you to breakdown the payroll costs into different departments/groups of employees.

  • Are they compliant? 

GDPR and the protection of personal data is hugely important for payroll.  Most of the information that is being dealt with is personal information.  It’s important to know the way the provider will safeguard your employee’s information, what your responsibilities are as the data controller and what their responsibilities are as the data processor.

  • Do they offer ePayslips? 

The age of technology is well and truly with us, and with it the move to electronic payslips.  These are cost effective for the employer, saving on postage and time, and convenient for the employee, with having their payslip available anywhere they have internet access, and for them to be able to save and print as many times as they require.  No more, “I’ve lost my payslip can I get a copy?”.

 

Finding the right fit in a payroll provider is crucial, as they will be an extension of your business as they deal with your payroll, employees, and be acting on your behalf with organisations such as HMRC and The Pension Regulator.  They will have a key impact on keeping your payroll compliant.

 

Hayley

Chanonry Payroll Solutions Ltd

 

To get more information on what's mentioned above, our charges and what we offer, and for an individual quote for your payroll, contact us on:

info@chanonrypayroll.co.uk

07734322909

 


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