Benefits of Outsourcing Payroll Against Payroll Software

The essentials element of payroll administration in the UK is to accurately calculate the income tax and national insurance contributions deducted from the employee each pay period, produce payslips for each employee and account to the tax office for the payroll deductions.

Running a payroll system is natural for medium and large companies who may employ specialist payroll staff to perform these functions. Many medium companies may still choose to outsource the payroll function leaving many of the technical issues that might be encountered to a specialist payroll service.

Small businesses may choose to outsource the payroll function because they are not familiar with the paye system although HMRC do run seminars to assist employers. The payroll system not only calculates the tax and national insurance deductions but also has to deal with tax code changes, new employees and changes to existing employees plus taxable benefits and allowances such as statutory payments for sickness and maternity leave, contracting out of the state pension scheme and student loans.

The main benefit of manually producing the employee payroll is the reduced cost although the time spent on the payroll function by the proprietor may be better spent running the business. The cost may not be the cheapest option if an employee is required to produce the payroll. Purchasing payroll software can save significant time and costs for the small business that chooses to prepare and control its own payroll function. Although time is more important as the payroll production cost is not usually a big issue.

Outsourcing payroll adds a small additional cost to running the business but would normally carry worthwhile benefits in reducing the time spent on the function and reduces the paye administrative burden.

Main benefits outsourcing the payroll function.

1. Frees up time in calculating the payroll deductions and dealing with different and sometimes complex employee circumstances.

2. Using a professional outsourcing service to advise on potential payroll problems and difficulties.

3. The cost of outsourcing payroll should be compared against the cost of employing specialist in house payroll staff.

4. Payroll services use payroll software and are more likely to produce accurate tax and national insurance deductions and pay records reducing the prospect of problems with the tax authorities.

5. Payroll administration such as preparing the tax deductions schedules, dealing with starters and leavers, year end certificates for employees and the employer annual returns are normally all automated as part of the payroll service

6. The outsourced service company should also be responsible for producing employee payslips, advising tax and deductions liability and in larger businesses also provide a payroll analysis for accounting purposes.

Alternatives to outsourcing payroll functions.

Finding a suitable outsourced payroll service is not difficult. Local telephone directories or searching the internet would produce many potential payroll service providers.

Many accountancy firms offer payroll services to their clients and although the prices may struggle to be competitive price is always negotiable. Using the business accountant for the payroll has advantages since a substantial cost area for most businesses is already known to the accountant since they prepare the numbers.

Choosing payroll software.

The major alternative to outsourcing the payroll is for the business to acquire and use payroll software.

Larger companies require payroll software that has incorporated within it all the potential pay scenarios and also be capable of dealing with high numbers of employees. Large comprehensive packages can be complex to operate and require specialist wages staff.

Small business may choose simpler less complex payroll software packages that meet the basic needs of the business. It is important the person running the payroll within the wages function understands the payroll essentials and legal payroll administration requirements.

The advantages of choosing payroll software is basically the cost should save the business money against outsourcing the payroll, should retain control over the function and liabilities and ideally should take no more time that supplying employee details and gross wages to the payroll service.

If the business chooses to adopt a payroll software package then the complexity of the package should be considered and also the attributes and capabilities of the chosen software to produce all the payroll requirements in relation to pay and wage deductions, paye administration and employee payslips.

Payroll Software – Top Five Time Savers

Are you feeling stressed when it’s time to complete your payroll? Take advantage of the tools available within payroll software to eliminate your stress and shorten your payroll processing time. Here are some time-savers that can make a drastic impact on your payroll processing.

1. Ditch the Spreadsheets.

Most businesses do keep track of pay codes within their payroll software system. Pay earning codes store the formula used to calculate each employee’s pay. On the other hand, pay deduction codes are used to calculate things like vacation, paid time off, wage garnishment and a whole host of other functions. Many employers opt to keep track of deduction codes in separate spreadsheet. The general belief is that the payroll system cannot calculate their specific deduction needs because they are too complex. The truth is, there are payroll software systems that can handle a wide variety of deduction codes, including the complex. It’s worth checking into. Once deduction codes are set up, the system handles the calculating, and you don’t need to bring in that information by hand.

2. Pay via Direct Deposit.

You might be surprised how much time you spend printing checks, stuffing envelopes, and managing printer and paper supplies. These can all be gone if you choose to pay employees via direct deposit. Instead of printing, stuffing, and delivering, checks are distributed in one short step to the bank account of the employee’s choice. You save time, and employees get their pay faster.

3. View Pay Data Online.

If you pay employees via direct deposit, you can cut out the step of printing and distributing the pay advice slip – a document that contains information about employee pay. Put the pay information online, in a secure environment, where employees can log in anytime to get the pay information they desire. As an added benefit, if an employee calls years later looking for pay information, you can simply get them their password, instead of scouring through old files to find things like their W-2.

4. Copy Pay Runs.

If you don’t want to recreate your payroll entirely, use the ‘copy pay’ function to copy pay from a previous pay run, for those whose salary remains the same, such as salaried employees. Using this function can save you many manual time entries!

5. File Taxes Electronically.

There are so many unnecessary steps when it comes to filing payroll taxes. Order the forms and envelopes, run the data, print the forms, stamp the envelopes and mail them. And that doesn’t even include printer maintenance! Skip all of the extra work and file your taxes electronically!

If you have used the same payroll system for many years, check and see whether any of these time-saving features are available to you. They can really cut down on payroll processing time.

Top 5 Free Payroll Software

Most business owners can keep track of their employee time and pay by using free payroll software. Cutting out additional expenses and providing customizable data fields, this excellent tool even offers support to troubleshoot product use.

The Top 5 Free Payroll Softwares are listed below:

#1: NolaPro v4.0.

This free accounting and business management suite is web-based and provides a full service which includes inventory tracking and order entry. NolaPro also includes plugins for business-to-business web portals, point of sale and an ecommerce shopping cart. Menu displays, colors and icon sets are customizable, and the interface is flexible based upon your business needs. Different companies can have several sets of books and data is not restricted. Security is at a high level of safety in order to provide permissions to users who may access the software. There are no banner ads, no restrictions to the license and no advertisements, this software is fully functional for its free use.

#2: Journyx Timesheet.

By focusing on the decision-making process, Journyx offers an interface that allows individuals to enter expense and project time information from any location that accesses the Web. Information from Journyx transfers over to existing HR systems. Journyx tracks employee time for projects, rates and expenses and makes the process of collecting this information easy and seamless.

#3: TimeTrex.

This web-based time management suite provides attendance and time, invoicing, as well as accounts receivable and other important functions. Employees are able to track their time by cell phone as well as bar code reader from anywhere they may be. Calculating overtime as well as other business policies and costs allows an employer to identify the costs of labor by specific employee, department, quantities produced, branch, and task type. TimeTrex even calculates taxes to be withheld, prints paychecks, provides electronic paystubs and can direct deposit an employee´s pay.

#4: actiTIME Basic.

Management and billing have never been easier for mid-size as well as small businesses. actiTIME is a web based time tracker that helps to streamline meticulous daily time management tasks. This free program tracks projects based upon customer as well as employee, access can be granted to several employees with various levels of security, tracks overtime and both non-billable and billable tasks to transfer to QuickBooks. Support is available for this product for free.

#5: Asman Accounting.

This system for bookkeeping provides a double-entry general journal for all business tracking. Financial analysis for any business is important, and this program includes line graphs, bar charts, pie charts and 3D bar charts to help compare employee productivity and trends. Show trends in monthly, daily, bi-monthly, weekly, quarterly, yearly and half-year settings as well. This program is fully customizable and provides accounting options and more.