Why Get a Payroll Manager?
As a business grows, managing payroll becomes increasingly complex. A few monthly payments can soon encompass a multitude of additional deductions and tasks including tax codes, pension contributions, statutory pay, leavers and joiners and regular reporting to HMRC. A payroll manager, whether in-house or provided by an accountancy firm, can support a business with the management of all of these aspects of payroll in order to ensure that all payments are accurate and compliant.
Specialist knowledge and compliance
Payroll involves tax rules, reporting deadlines and employment law that change regularly. A payroll manager knows how to calculate pay correctly, apply the right deductions and meet HMRC’s requirements. Under Real Time Information, employers must report pay and deductions to HMRC on or before each payday, so there is little room for delay.
A payroll manager also keeps on top of workplace pension auto-enrolment, statutory sick pay, maternity and paternity pay, student loan deductions and year-end reporting. That reduces the risk of errors and penalties and keeps payroll to a reliable standard. Many firms also review their internal processes with support from Evesham accountants such as www.randall-payne.co.uk/services/accountancy/evesham-accountants/ to ensure everything remains compliant.
Time and cost efficiency
As well as processing the payroll each week or month, a lot of time can be spent in processing the same information over and over again. A payroll manager can set up better processes and systems and greatly reduce errors. This means less time spent correcting errors on payslips, dealing with complaints and dealing with HMRC matters, allowing you to focus on growing your business.
Stronger data security
Payroll records contain personal details, bank information and salaries, all of which must be handled carefully. A payroll manager oversees secure storage, controls who can access the data and makes sure data protection obligations under UK GDPR are met. This helps protect employee information and reduces the risk of a data breach. The National Cyber Security Centre has a guide on data breaches.
Better employee support
Employees want to be paid in an accurate and consistent manner. A payroll manager can answer queries regarding pay statements, including any deductions, and can explain tax codes. Regular production of accurate payslips and timely payment of employees makes for a more positive working environment.
In-house or outsourced?
| In-house payroll manager | Outsourced payroll | |
|---|---|---|
| Best for | Larger or complex workforces | Small and growing businesses |
| Cost | Salary and software | Usually a fee per employee or per run |
| Knowledge | Deep understanding of your business | Wide experience across many clients |
| Cover | Needs backup for holidays and absence | Provider handles continuity |
It’s important to note that whichever route you choose, the employer remains legally responsible for the correctness of the payroll processing and therefore you should carefully select payroll support and monitor the payroll reports.
Signs it is time to get payroll help
- Payroll is taking hours away from running the business each month.
- You have had errors, late submissions or HMRC penalties.
- Staff are asking more questions about their pay than you can answer.
- You are taking on staff with more complex pay, such as shift work or benefits.
- Nobody else in the business could run payroll if the usual person was off.
Frequently asked questions
Do small businesses need a payroll manager?
There’s not necessarily a need for a full-time payroll administrator in smaller businesses. Payroll can be managed by software and from time to time by an external expert such as an accountant or payroll bureau. However, someone reliable needs to understand the rules and deadlines and be able to deal with issues as they arise. As a business grows in terms of staff numbers and complexity, a dedicated payroll expert becomes more desirable.
What happens if payroll reports reach HMRC late?
HMRC can charge penalties for late payroll reports and late payments, and interest on tax paid late. Repeated problems also make it harder to spot and correct errors. Keeping to a clear payroll calendar, with submissions on or before payday, avoids most of these issues.
Where to go next
Payroll is closely tied to cash planning. Read why cashflow is the lifeblood of a business.
Effective payroll management supports accuracy, compliance and employee confidence throughout the business.
