It’s an exciting time when a small firm or start-up begins to take off. New customers are rolling in, fresh-faced colleagues are starting to join, and stock is (hopefully) flying off the shelves.
But as businesses grow, they get more complex to manage. What was once a sole tradership below the VAT threshold can turn into an SME with a dedicated office, staff to pay, and numerous tax return deadlines to meet in short shrift.
Many smaller organisations will rely on just one or two people to carry out HR, payroll and finance functions internally. As growth takes place, their time will start disappearing as demands increase, and 24% of small business owners are already spending more than four hours a week on payroll administration tasks.
But perhaps the biggest challenge is trying to keep on top of the latest legislation regarding payroll. What are the new statutory rates? Have pension rules changed? What about holiday entitlement, sick leave, or data protection regulations?
Smaller businesses rarely have the in-house resource and expertise to keep abreast of all the new and upcoming changes. In fact, even the largest organisations struggle in this area. It’s why six in 10 UK businesses outsource either some or all of their payroll processing.
There are lots of benefits to outsourcing payroll, many of which we’ve written about previously. But a big benefit that these businesses enjoy is being able to offload the headache of staying on top of the latest rules, case law and legislation.
Here are some of the ways in which outsourcing payroll can help ensure regulatory compliance.
No more surprises
Busy internal payroll teams already struggling under the burden of administrative tasks may find it difficult to prepare for big changes in legislation. Think of auto-enrolment as a recent example of how almost all businesses had to comply and update procedures, and the amount of time investment was needed to get ready.
Your outsourced payroll provider literally makes it their business to understand all of the regulatory space that surrounds paying employees and plan well in advance for what’s coming down the track.
From existing rules to new tribunal outcomes and upcoming legislation, an outsourced payroll company will ensure you’re aware and prepared well ahead of time and not left scrambling to make procedural changes… or indeed facing a fine for not being compliant.
Data security improves
It might feel somewhat counterintuitive that your data security would improve by allowing a third party access to it. But the opposite is usually the case.
Your responsibility as an employer includes the secure capture and hosting of sensitive information, including that of your staff. When payroll is managed in-house, systems can become outdated and the latest security advice not adhered to if they’re not kept on top of – or a ‘this is how we’ve always done things’ attitude is in play.
An outsourced payroll provider will ensure they’re using the latest industry tech and cloud-based systems that are designed to safely and securely handle critical data. They’re also attuned to new legislation around data security and how that pertains to payroll information, something that not many in-house teams have the time to stay up to date with.
Speaking of pensions…
There’s nothing new about workplace pensions, but the way in which they’re offered and the contributions both employer and employee need to make can change.
Auto-enrolment was a great example of where a huge shift in the law surrounding employees resulted in organisations of all sizes needing guidance and support to get their schemes in place before the deadline.
Outsourced payroll providers are great at managing this entire process, both in coordination with your payroll executions to ensure the right contributions are being made and also managing the interaction between business and pension scheme providers.
If you need to create a scheme from scratch, they can also advise on the most suitable options available and manage the integration with your existing payroll processes too.
Accurate record keeping
Poor record keeping is a common issue affecting more antiquated finance and payroll operations. Paper records, impromptu expense claims and haphazard data storage can lead to mistakes and delays.
Processing overtime, maternity and sick leave, tracking hours AND making sure calculations comply with the latest legislation is an administrative time drain on payroll and HR teams. And too much work increases the chances that human error can creep in.
Outsourced payroll services, especially when integrated with an element of outsourced HR management too, can alleviate the majority of these pressures and free up internal staff to work more strategically rather than furiously working to stay on top of an overflowing inbox of demands and requests.
Keeping HMRC happy
No one wants HMRC breathing down their neck for incorrect or late filing. It’s a recurring nightmare that founders, business owners and finance leaders will start having as filing deadlines begin to loom large on the horizon.
Your outsourced payroll provider will ensure your day-to-day procedures are compliant, calculations are correct, and end-of-year submissions are accurate, liaising with HMRC directly where needed to make sure everything is above board.
That’s a huge burden that can be lifted off the shoulders of an internal team to manage, and business leaders can sleep more easily with the peace of mind of knowing that a specialist team is on the case.
Outsource your payroll to an award-winning partner
Outsourcing either some or all of your payroll processes saves time, money and distributes the responsibility for and regulatory burden on your business. It means you can tap into the knowledge of a truly specialist team of payroll professionals whenever needed – a team that will be working proactively to ensure your organisation is ready for whatever changes are coming down the road.
At Phase 3, our award-winning outsourced payroll services ensure our partners enjoy accurate, timely and compliant payroll processing each and every month with all the additional HR and finance support you’d expect too.
Learn more about how we can support your organisation as your specialist outsourced payroll provider here.