Managing Small Business Payroll – In-House or Outsource? What’s Best For Me?
- September 1, 2019
- Posted by: Gary Parsons
- Category: Pay, Reward & Benefits
Whilst there are numerous benefits to outsourcing your payroll process, it can be difficult to know whether this is viable as a small business, or if it’s only big businesses that truly benefit. There are pros and cons to managing payroll in-house and to outsourcing the process, but it’s important that you understand the full impacts of both when making your decision so that you can make sure you’re choosing the best option for your business.
Cost
One of the largest inhibitors for SMEs when it comes to payroll outsourcing is the cost involved with this, with some payroll providers coming in at a premium price. Therefore on the surface, it can appear that dealing with your payroll in-house is the more financially viable option for smaller businesses. However, there are a multitude of hidden costs that can come with processing your payroll in-house. Most notably is the initial purchase or subscription to payroll software, and the more employees you have the higher these costs usually are – these costs can soon add up for a small business looking for a more cost effective option. Moreover, there is a certain level of training required in order to effectively use the software and manage the payroll process accurately, which again can incur a cost.
Time & Productivity
Naturally there are time implications when managing your payroll in-house, and the amount of time this takes will be dependant on the number of employees on your payroll. If you’re thinking of managing the process in-house, have you worked out whether you have the available time and resource to effectively manage this? It may be the case that with managing your Payroll in-house is more viable when you have a limited number of employees. However, the more employees you have the longer this process will take and ensuring this is done accurately and on time will add more stress. If you’re finding this isn’t working efficiently, there is the option to outsource which takes the time and responsibility off you. This means that you can spend more time on the aspects of your business that you’re passionate about, which is definitely another motivator for outsourcing the payroll process.
Legislation & HMRC Compliant
It’s crucial that when you’re managing payroll, you’re acting in accordance with legislation and compliant with HMRC. Legislation is set to change regularly, therefore keeping up to date with these changes and making sure your process is accordance with legislation is essential. It’s likely those dealing with the payroll will have to undergo ongoing training in order to ensure they are up to date, and naturally this can be a timely and costly process. Whether you work in a small or large business, ensuring your payroll is done accurately is a necessary step, and some businesses feel the responsibility associated with this is too much.
Payroll Software
A further consideration with an in-house payroll process is the use of payroll software to help manage the process. If your business has under 10 employees, you can usually get a free version of software which can be a great cost effective option for a smaller business. However, if you have more employees you will have to consider the cost involved as well as the scalability of the software (as more employees are added). Furthermore, do you or your employees have the time and capability to effectively use this software, and have you looked at the training that is involved here?
Choosing whether to outsource your Payroll, or deal with it in-house is subject to the nature of your business, the way it operates and the time and resource available. If you would like to know more, so that you can make a more informed choice, get in touch with our experienced team at Talk Staff Payroll today.
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Last Updated on 1 year by Hannah Ingram
