Outsourcing Payroll in 2023: Frequently Asked Questions

Accurate and efficient payroll is a key component of a happy and smooth-running workplace. 

Managing your organisation’s payroll may seem like a cost-effective solution, but on the contrary, outsourcing a professional service to do this holds multiple benefits that actually saves you money in the long-run. 

We answer some of your burning questions about outsourcing payroll.

Will outsourcing a payroll service sav me money?

Absolutely. For any business, particularly SMEs or new organisations, time is money, so hiring a savvy payroll service to manage this portion of the business will save you many hours that could otherwise be spent focusing on other aspects of the company. 

It can also work out cheaper and more reliable than utilising software.

How much does it cost to outsource payroll?

This depends on a series of factors, including the size of your organisation and the full depth of the assistance required (such as pension schemes, student loan deductions, etc.). 

Because fees vary from service to service, and depend on the aforementioned factors, your best option is to request a quote.

What are the key benefits of outsourcing payroll?

There are multiple; the main ones being:

• One less task on your list.
• Peace of mind from managing it yourself (or implementing software), and being safe in the knowledge that your payroll is in the best hands.
• Full accuracy/less errors or late payments.
• No fees or fines from HMRC if there are errors/late payments.

How can I be sure our payroll is being correctly managed when outsourcing?

It’s fairly easy to tell if there are issues occuring in the outsourced payroll solution, because HMRC is always on the ball at chasing up errors or late payments – as is your staff! One way or another, if there’s any mishaps afoot, you’ll know.

Is it easy to outsource payroll?

Incredibly so. Once you’ve communicated with the designated service, and have received a quote, the set-up process is quick and easy.

A good provider will be hot on their communication and will provide full transparency, as well as answering any questions or queries you may have.

When should I outsource payroll?

Realistically, the best time to outsource payroll is before or during a period of growth which sees additional staff members to your organisation. 

Aside from that, if payroll is a monthly cause of stress or worry for you, outsourcing is the obvious solution.

Is it simple to transition from our existing payroll software?

It is. However, if you’re tied into an annual software package that doesn’t facilitate early withdrawal, you’ll still be expected to pay for the package, as well as using an external provider.

How long will it take to outsource payroll?

This can vary, but it is generally recommended that you allow for at least a two-week window of transitioning – and try to tie this in with the next payday. This should provide ample time for the provider to implement their services and outline a timetable.

How long are outsources payroll contracts?

This is typically negotiable; however, some providers may have set contracts: monthly, quarterly, annually, etc.

How are payslips provided?

These are typically now completely electronic. This is quicker, cheaper, more secure, and more sustainable.

What info do I need to provide an outsourced payroll service?

You will need to provide them with all of the information held in your current payroll solution, as well as any ongoing data per every pay run. 

You can do this via Excel, email, or a data portal. The provider will explain what they need and the best way to acquire it.

Can employees contract the provider?

Yes, this information should be made available to them so that they can communicate with the service if any issues with their wages occur.

Can my accountant do my payroll?

If this is a service they provide, it makes sense for them to take on this additional role. 

If they don’t, it can be worth investing in a payroll provider that offers accountancy services to cover all of your financial endeavours.

Does HMRC need to know if I outsource a payroll service?

No, they do not need to have this information.

What should I look for in an external payroll service?

As with any service, looking for tangible evidence of their competence and credibility is key. 

This can be by way of verbal recommendations from other business owners, positive Google reviews, and testimonials.

Ask questions too. Make sure they can walk the walk, as well as talk the talk. Check how long they’ve been in business, their notice period, contractual agreements, costs, additional services, and anything else you feel is relevant.