Payroll Services Resources

What are payroll services?

Any company who specialises only in payroll are known as payroll service providers. Payroll services originated in the USA in 1949, and the first automated payrolls came into existence. Later, the automated payrolls became ADP or automated data processing, and are a large outsourcing service in the world. The basic aims of payroll services are to collect the hourly rates from employees. The data given is then used to calculate the gross wage of each employee, and subtract all deductions and pertinent withholdings. Payroll service providers also print professional cheques, make direct deposits into accounts and prepare tax filings. Some larger payroll service providers may even offer services such as accounting or benefit programmes.

What are the benefits of using a payroll service?

It makes it a lot easier to budget because the organisation knows all of the costs in advance.
Time and money will be saved within the organisation. Usually a payroll provider will allow their client to make the simple calculations so that they can find out how much the service costs.
There are no administration burdens that can be associated with the management of a client’s own payroll.
There is no need to worry about statutory requirements or any changes to payroll legislations.
The company need not worry about having any interaction with Government bodies and HM Revenue and Customs, because the payroll services provider liaises with them.
There is no need to rely on IT departments, or the need to incur any training costs to run a payroll department.
There is no stationery to purchase, or software and hardware, so therefore there is no need for capital expenditure.
No expertise in payroll is required.
If an organisation ran their own payroll service, they would have to ensure that if any payroll staff were on leave or sickness absence, cover may have to be provided, but by outsourcing those payroll services, the client avoid the inconvenience and cost of providing that necessary cover.
A payroll company complies with confidentiality, meets payment deadlines and processes them with accuracy.
Company standard or specific reports will meet any organisation’s requirements at the present time and in the future.
There is always the peace of mind of knowing that each aspect of a company’s payroll is controlled by professionals.

What is the difference between using a payroll bureau service and a full managed payroll service?

If an organisation outsources the payroll run within their organisation, to a payroll bureau, their organisation will still have to:

Organise any cover for sickness, holidays or other leave for payroll staff;
Remain up to date with all Government legislation. This can be time consuming;
Budget the recruitment costs for payroll staff;
Invest the time in training, administration, payroll filing and employ payroll staff who are experienced.

It is best to outsource a payroll service provider who can manage the payroll service fully. There will be no need to worry about any of the above points if a fully managed payroll service provider is place. A fully managed payroll service will give a number of advantages:

The payroll services provider will be able to speak to a member of staff in their client’s organisation if they have any queries;
The chosen outsourced payroll management provider will process monthly payrolls and offer implementation processes that are appropriate to their client’s organisation;
The organisation will receive the contact details of the person who is dealing personally with their organisation’s payroll services, should they need to contact them at any time;
All payroll data will be double-checked for accuracy;
The organisation can have the confidence that all payslips will show a high level of accuracy;
The payroll services organisation will offer regular consultations to ensure they are meeting their client company’s needs, and they can also describe any new products that could be incorporated into their client’s existing service.

What is managed payroll?

It is an outsourced service that allows a company to have all their payroll requirements fulfilled. It is much more than a payroll bureau service, because it covers all the aspects of payroll, including payment and calculations, liaising with HM Revenue and Customs and the filing of appropriate paperwork. If an organisation decides to outsource a managed payroll service, it is highly likely that the company will save time and money, because every aspect of payroll will be covered by the payroll services provider.

What is BACS?

BACS is a two stage process: calculation then payment. The payroll information is given to the outsourced payroll company and they work on the calculations, then transfer payments to all staff. On a date chosen by the client, the monies are taken from their company account and credited to the account of each employee using the method of BACS or bankers automated clearing service. The use of BACS can improve a company’s cash flow because there is no more need to sign any cheques or use petty cash.

When should a company consider using payroll services?

Some points to consider may be:

Does your company have the time and personnel staff to check the accuracy of calculations for payroll and comply with Government legislation and tax laws?
Does your company have a system in place within the organisation that issues payments effectively, and on time?

If an organisation cannot answer yes to those questions, then it may be wise to consider outsourcing their payroll services.

Is outsourcing payroll expensive?

That can depend on the number of employees that an organisation employs, and how frequently they are paid, i.e. weekly, fortnightly or monthly. There should be no hidden charges with payroll. The service will also include P60s, P45s, P35s, PAYE, P11Ds, NI and year end returns. A payroll provider will normally have an on-site calculator that will allow the client to estimate their overall costs, before contracting in a provider’s payroll services.

Will outsourcing payroll services save a client money?

It can pay for itself in a variety of ways: avoids bank charges, saves time and gives the organisation the confidence of knowing that their payroll is being looked after by a professional company. This can leave an organisation with the freedom to concentrate on the management of business.