Outsource your payroll

Introduction

If your business employs people, you are obliged to set up a payroll system in order to deduct the correct amount of tax and National Insurance contributions (NICs) from their pay. In addition to their taxes, your system will need to be able to handle any changes in employees' taxable benefits (eg company cars), and payroll deductions (eg pension contributions or student loan repayments).

Many small businesses outsource payroll functions. This is largely due to the fact that calculating tax and NIC deductions can be time-consuming. Payroll can also be complicated by other deductions such as tax credits, maternity pay, pensions and student loan repayments.

Whilst outsourcing your payroll will be an extra cost to your business, it will:

• save time allowing you to concentrate on other areas of business
• reduce employee overheads as you will no longer need to employ a payroll specialist
• 
  reduce paperwork and administration as this can all be outsourced as part of your payroll function
• improve accuracy as systems are likely to be computerised

There are two main ways to outsource your payroll:

• an accountant's services
• a specialist payroll service company

This guide will introduce you to the different outsourcing methods for your business.

Subjects covered in this guide

• Introduction
• Considerations when outsourcing your payroll
• Payroll supplier checklist