Payroll is an integral part of any business owner’s list of things to do regularly. It especially poses a problem when having a weekly or fortnightly payroll frequency. However, even monthly can be taxing enough. After all, payroll isn’t just about getting those payslips right, but a lot of compliance-related elements too that one needs to keep abreast. Though HMRC has tried to simplify things through RTI, it also adds to the complication of meeting deadlines and ensuring the right amount of tax is being deducted.

Employers prefer to outsource payroll not only to save time, but also to ensure that the proper compliances are met. Take the previously run furlough scheme, for instance, many employers now find themselves receiving letters from the HMRC, who are now reviewing all the claims made right from the start of the furlough scheme. If it is found that an over claim has been made then the employer would have to provide an explanation for the same as well as pay back the monies owed. The hassle of putting together all the documents required and then communicating with the HMRC alone would be time-consuming as well as stressful. Thus, outsourcing payroll services can be seen as a move that not only frees up an employer’s time but also reduces the compliance-related stress involved.

Compliance isn’t just about HMRC:

Paying your employees right would seem to be an ethically correct solution. But this also is compliance-related as the HMRC isn’t the only one monitoring compliance. For an employer, an employee is one amongst a group of other employees, but for the employee that payslip generated is the sole payslip. Hence, he or she will do a thorough double-check. Thus, discrepancies related to holiday pay or overtime hours will be easily picked up. Another element is the National Minimum Wage or NMW. In all good faith, the employer might be assuming that he or she is paying the employee the right amount. However, it might not always be so. In such cases, if the employee complains to the HMRC, they would run an NMW compliance check and arrears as well as penalties would have to be paid, never mind all the hassle of looking up past payment records etc.

In light of this, the payroll outsourcing cost starts to seem insignificant. Also, when giving your payroll to an expert, you get peace of mind in the bargain. One aspect is the compliance-related angle, where you are assured, things will be done following the legislation, while another element is that deadlines will be met. This in itself is a relief, especially since payroll deadlines are such a regular feature. Thus, it just goes to show how seriously the government takes payroll.

The tax element:

Fundamentally the whole PAYE system has been put in place as a means of the collection of taxes (Income tax and social security). Therefore, it is no surprise that the government wants to ensure that the right amount of tax is deducted. Furthermore, employers are responsible for tax deductions and other deductions like DEAs, AEOs and even Student Loans. Along with ensuring that you pay the right amount of wages as an employer, you would also need to see if the correct tax code has been updated and tax deducted accordingly. Thus, it leaves many employers frustrated with wondering whether they are supposed to focus on paying their employees or running their business. Any accounts related task is by nature time-consuming as well as demanding as one needs to be meticulous.

How you cannot ignore the workplace pension:

Furthermore, another additional administrative task has been added in the guise of workplace pensions. It has made things more complicated because the employer expected not only to have the pensions deducted on time but also to assess staff as it is possible due to an increase in wages or age, down the line, an ineligible employee suddenly qualifies. Thus, the burden on the employer increases because this activity needs to be done without fail every payroll. Also, deducting is not enough, but the contributions need to be uploaded on the pension provider’s site. Re-enrolment is another element that needs to be looked into because it is a mandatory task that needs to be done every three years to avoid issues of non-compliance.

Hence, payroll no longer is a simple task. There are a lot of complicated elements attributed to it, which is why an employer is better off leaving this activity to the experts. Time and tide wait for no one. Thus, a better investment would be to contribute time to one’s business and leave the payroll process to your accountant and the best part? In the scheme of things, payroll services do not cost all that much! Contact us for more details.