For many businesses, the administrative cost of looking after a payroll can be severe. Mistakes can be enormously costly, and smaller businesses might not be set up to deal with the workload.
Fortunately, payroll is something that can be outsourced to a specialised third-party, in much the same way as any other rarely-performed tasks. Specialist payroll services have the experience necessary to deal with complications like overtime and taxation, and they won’t take your full-time staff away from their other duties.
How is payroll pricing structured?
Basic Payroll Outsourcing Costs
For the most part, your payroll expenditure will come in the form of a basic monthly package fee, which can add up to hundreds of pounds per month, depending on the size and complexity of your business.
As well as ongoing fees, you might find that there are one-time setup costs. If you’re going to be installing a system to automatically log employee hours, for instance, then you can expect to pay more.
Factoring Pay Frequency
The more often you pay your employees, in theory, the greater the administrative burden on the payroll provider. If you’re paying weekly, then you can expect to pay more for your payroll than if you were paying monthly. Of course, you can change the payment frequency – but you might have to pass on a little bit of those savings to your employees, to keep them onside.
Charges for Tax Assistance
The payroll service provider won’t replace your accountant, but it will function a little bit like one for an additional cost (which we’ll get to). If you’re calculating tax obligations across multiple countries, then you might find that the cost for a HMRC payroll system is proportionally higher.
How much will it cost?
Outsourced payroll will, however, impose an additional cost onto your business. Therefore, you’ll need to determine whether this cost is justified by the savings you’ll make elsewhere. To do this, let’s look at some of the factors which determine the cost of your outsourced payroll.
How big is the business?
Larger businesses will have more complex payroll requirements, and this might be reflected in the price charged by the service provider. With that said, larger and more complex payrolls are also those which will get the greatest benefit out of outsourced payroll services.
What level of support is being provided?
Many payroll services will offer different kinds of services. You might find that tax calculation are included as an optional extra, for example.
What type of software is being used?
If the service is going to install bespoke payroll software on your computer system or create a cloud-based one that you can access remotely, then you’ll have to pay either an additional monthly subscription or a one-off payment, in much the same way that you do for the office programs your business might use.