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Small business payroll services

Small Business Payroll Services

Even the most meticulous and experienced human resources professionals find that handling payroll can be a headache. For many small businesses, payroll services offer an attractive and valuable alternative to in-house processing. They can provide a less expensive, simpler means of paying employees, organising tax and National Insurance payments, and performing other essential but mundane tasks.

Is a payroll service right for your small business?

Extremely small firms with a stable, salaried staff and minimal changes in tax obligations may well be better off processing internally; it can be more convenient and cost-effective if your needs are straightforward.

However, even for small businesses, processing salaries internally is not always as cost-effective as it appears. As a minimum, it costs valuable hours of employee time every pay period plus expensive accounting software and training. In addition, the person who handles your payroll needs to keep up to date on changes in personnel, deadlines, and tax requirements. Without the proper knowledge of payroll procedure and access to a sound payroll system, it is easy to make mistakes.

Payroll outsourcing can be an affordable way to remove this burden. If your employees work varying amounts of hours each week or if you have significant turnover, a small business payroll service can be a time saving and cost-effective alternative to internal processing.

Even if your payroll expenses are quite stable, companies with more than 10 employees may find that the time saved by outsourcing payroll easily makes up for the low costs.

What do they do?

Small business payroll services typically handle a range of payroll tasks, including calculating net pay, tax, and National Insurance for each employee; printing and delivering cheques or arranging BACS payments; and providing management reports. Small business payroll services can make payments on a weekly, fortnightly, or monthly basis.

Look for stability
If a firm's only business is payroll, make sure to check the number of clients it supports. To ensure stability, a payroll service should ideally maintain at least several hundred clients.

Be wary of low fees
Watch out for providers that offer low base processing rates with lots of expensive add-ons. Your total fees may wind up being more they would at a provider with slightly higher fees but more services included.

Choose the right provider
Buyerzone can help you find the payroll service provider that’s right for your small business.

Find small business payroll suppliers in your area

Additional payroll-related services that may carry separate fees include automatic cheque signatures, and creating HM Revenue & Customs reports. Many services now offer tie-ins with pension plans, allowing employees to set up automatic deductions from their pay.

Many small business payroll services offer the option of completing VAT and other tax returns for your business as well. How does it work?

Each pay period, you give payroll data to the payroll service provider. While this used to be done via a phone call or fax, almost all data is now transferred electronically.

The standard method is by modem. The provider will supply software for tracking each employee’s pay rate, deductions, and absences . You simply enter the relevant information for that pay period, and information automatically transfers to the payroll service provider.

Some providers also offer Web-based payroll data entry. You enter employee information on a secure Web page, which feeds directly to the provider. This method is gaining acceptance, but is still less popular than modem-based communication.

How much does it cost?

Basic small business payroll services typically cost from £50 a month. Additional fees apply for extra services.

There are often fees for adding or removing employees, adjusting employee information, and setting up your account. These fees can differ dramatically from provider to provider. Make sure you are looking at comparable pricing when evaluating different providers.

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