Employee payrolls operate under a PAYE (Pay As You Earn) system, meaning that each individual employee has a tax code forming the basis of income tax deductions from pay. Add to this the constant changes of circumstances (stopping and starting company benefits, overtime etc), auto-enrolment of pensions and paying (and often reclaiming) payments like maternity and paternity entitlements, all means that running an in-house payroll system is complicated, requiring someone who has the knowledge and ability to cope with its demands.
Putting aside potential issues, such as reliability and confidentiality, even a small business with very few employees can not expect to just “tag on” the role of payroll administrator to an existing job role (such as office manager), without there being a considerable expense.
Why is it expensive to run payroll in-house?
Some of the major expenses include:
Salary – payroll staff needs paying too so don’t forget their salary (and your NI and pension contributions etc, even if it’s a percentage of a “tagged on” role). You must also take into account additional and often unexpected costs such as holiday cover (your payroll can’t wait) and replacing leaving employees, including recruitment fees/expenses and training as well as “lost” time as a new employee learns their new role.
Space – payroll staff needs to have a “home” which could be an issue if space is at a premium in your business. Don’t forget to calculate payroll’s share of electricity, heating, and other facilities.
Equipment – aside from the basic IT equipment, you’ll probably need payroll software and don’t forget their share of a printer and memory storage too.
Support – payroll staff need support/time input from IT and HR
Training – since PAYE is constantly changing, there’s a need to be up to date with the latest rules and regulations, so don’t forget to factor in some training expenses.
More than just money
An increasing number of employers choose to outsource their requirements to payroll professionals because, aside from the expense, your payroll system must be confidential, accurate, constant and reliable. If you;
– don’t pay your employee on time or pay the wrong amount you could find yourself before a Tribunal and/or Court
– don’t meet your obligations under RTI (Real Time Information) to HMRC, you will be fined.
This is why more employers are choosing to outsource their requirements to payroll professionals. Managed payroll services from Cintra Payroll will enable you to
– deliver an effective and efficient payroll
– properly comply with all of your obligations as and when they fall due
– eliminate those unexpected costs and headaches
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