Do I Need the Added Expense?
Running a small business is hard work, filled with time consuming administrative tasks that appear to have no bearing on generating profits. Outsourcing aspects of your business that you don't excel at may seem like an extra expense that your business does not need.
However, the reality is that outsourcing mundane and routine aspects of your business gives you back the time you need to focus on growing your business and gaining more customers, making it an investment as opposed to an expense.
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Outsourcing the payroll function of your business is easy and can be done in these five easy steps.
1) Work Out What You Need From a Payroll Service
The more of your payroll you outsource, the more time you free up within your business. Aim for outsourcing the majority, if not all, of the work, for a better return on investment.
Some providers (payroll bureau services) offer very basic services - you compile all of the information and issue pay slips, whilst they simply transfer the right amount at the right time. Managed payroll services do absolutely everything, with just a small amount of input from you, and you can find services that do anything in between those extremes.
2) Research Available Services
The next stage is to find out who offers the services you want to buy at a price you want to pay. Use a comparison site first, as these allow you to define your requirements and offer a selection of providers that are suitable, along with prices and further details. Further research could entail internet searches, the phone book and a hunt around local service providers.
3) Make a Shortlist
In stage one, you defined what you need from a provider and in stage two, you found a huge range of providers that offer that service. The next stage is to shortlist to a few perfect or near perfect providers to outsource payroll with.
These companies offer the right services at the right price. They should also have a great reputation, experience, no hidden costs and an upfront approach to offering information about their services.
Additional features, like flexible contract terms and payment terms are also important. You also need to check that you meet their requirements, such as minimum quantities, geographic location and systems compatibility, if applicable.
4) Contact Your Preferred Suppliers
You have done all the hard work; it is now down to the front runners to win your business. This may be the stage where your shortlist whittles down even further to those companies that respond and are interested in working with you.
You may find at this stage that you are offered more than you thought and there is nothing to stop you negotiating with your preferred suppliers for better discounts or more services. The result of this stage should be to select the one provider that meets all of your requirements and who you are happy to form a long term relationship with.
5) Create Systems to Ensure the Payroll Service Runs Smoothly
Preparation in the initial stages will help you to reap all of the benefits of your outsourced payroll service. If you have opted for a payroll bureau service, then ensuring you have enough resources to collate the required information is essential.
Managed payroll services take the vast majority of the burden away from your business, so this stage is mainly about getting everything set up correctly so that the service can manage effectively, based on the right initial information.
Benefits of Outsourcing
Payroll and accounting are administrative tasks that take up an inordinate amount of time because they are heavily regulated. That means mountains of paperwork, record keeping and time spent keeping up to date with the law.
There's no two ways about it - these functions are a burden on small business, so if you employ more than one or two staff, you could reap enormous financial and operational benefits by outsourcing.
- Free up your time to focus on running and growing your business
- Save money on specialised payroll and accounting software, and the training to use it
- Be confident that your business is meeting its legal obligations and is fully compliant
- Save expenditure on hiring a qualified and dedicated team member
- Enjoy less personal stress if, as business owner, you have been juggling these tasks on your own
How Much does it Cost to Outsource?
With such a fantastic choice of suppliers offering these services in a growing industry, you can enjoy relatively competitive prices. However, costs will depend upon supplier and level of service, as each provider will offer their own range of options in their own distinct packages.
Fees and fee structure do vary considerably between providers. Some will charge you a simple price per payslip with no other charges; basic services start at as little as 50p per payslip and rise to up to £3 or £4 for a more complex array of services.
Other providers charge a flat annual retainer of around £100 (some more, some a little less), with a monthly fee or payslip fee on top. Things like maternity pay and other non-standard payments may attract higher charges so do check before agreeing to a service that you are aware of all of the potential costs.
What Services are Available for Small Business?
There are many options available to you if you take the decision to have services for outsourced payroll and accounting. These services are offered by a number of professional companies including accountants, some banks and a wide range of specialist firms.
Dedicated payroll and accounting companies are often the more cost effective option because they can offer economies of scale that smaller, more personal providers simply cannot offer. Specialist providers also tend to offer a wider range of services that have been specifically designed to meet the needs of small business. They invest heavily in technologies that make their service faster and more accurate whilst bringing down the cost of providing the service.
There are also a large number of online only specialist payroll and accounting providers. These could be cheaper and more flexible than a local accountancy firm but are also unlikely to be able to offer the wealth of services available from the big players.