Payroll is something that all companies with employees will need to deal with. The bigger the company, the more complex the payroll becomes. That is why many businesses now outsource their payroll to experts who can handle it for them and make sure they cover all their legal requirements. But how do payroll services work?
What falls under payroll services?
Payroll is about more than just making sure your staff are paid for the work they have done – it is also about deducting tax and national insurance at the right amount. It is also about sending this to HMRC under the PAYE system and keeping accurate records of what you have done. There are several legal requirements around payroll that mean it can be a minefield if it isn’t handled correctly.
For example, you need to tell HMRC:
- Who you have paid
- When you paid them
- How much you paid them
- How much you deducted from their wages
- What was this for (tax, national insurance, pension contributions etc)
This information must be reported on or before the day you pay your employees, known as Real Time Information or RTI.
At one time, the only way to handle payroll was to have someone working within your business to handle it for you. But with developments in the internet and cloud services, you can now outsource your payroll to a specialist who can be located anywhere in the world.
For a basic managed payroll service, you would get access to a skilled team of payroll specialists who could take on the job of your company’s payroll. Each month they would load all payroll data, amendments and tax codes into a payroll system that would then calculate pay, back pay, adjustments, and overtime. This would then be checked for accuracy before laser print payslips could be produced – some companies also offer the option of electronic payslips if you want to cut out the paper.
The other big element is the actual payments and dealing with HMRC. BACS transfers would be set up to deliver the pay to staff accounts on the correct date, considering weekends and bank holidays. And the company would also act as a liaison with HMRC, handling the PAYE queries as well as dealing with things such as P45s and P60s.
As the business grows and the number of employees within it also grows. There are many advanced payroll services that the company can consider handling the expansion. For example, core HR functions are offered through Trace Payroll as part of our integrated HR modules. This allows us to handle disciplinary, grievance and appraisals for your company.
Another popular option is the employee self-service facility which allows staff to easily check their own data including pay slips help electronically, overtime worked and even pension or tax payments made on their behalf.
Safe Payroll services
Payroll services are also very secure, allowing companies to concentrate on other aspects of business security and not worry about data protection of employee information. By using such services, resources within the business can be concentrated elsewhere while being confident that the legal requirements are always covered