Outsourcing your payroll will be one of your smartest moves!
Outsourcing your payroll will be one of your smartest moves!
One of the most asked questions by directors of small and medium-size organisations is…
‘How do we process payroll in the most cost-effective and efficient manner?’
The answer is clear: the most efficient and cost-effective option is to outsource payroll to a trusted and experienced payroll bureau.
This approach not only ensures accuracy and compliance but also significantly reduces internal costs and administrative burden.
Are you doing your own payroll?
This could be a costly mistake!
At first glance, payroll may appear simple, particularly for smaller businesses. Many directors view it as merely a matter of crunching a few numbers each month. The reality is very different. Payroll is complex and constantly changing due to transforming regulations, for instance new employment laws and HMRC requirements. A small error or oversight can be costly and may cause serious cash flow problems. Additionally, the expense of investing in your own payroll software can rival or even exceed the costs associated with outsourcing these services.
A clear example of potential dangers associated with payroll management is compliance with the National Minimum Wage regulations. From April 2025:
• Employees 21 years and over must earn at least £12.21 per hour
• Employees between 18 to 20 years must earn at least £10.00 per hour
• Under 18 years and apprentices must earn at least £7.55 per hour
Even well-known companies and high-street retailers have faced public criticism from the government for underpaying their employees. These instances were not due to deliberate actions but rather resulted from payroll errors that led to wages falling below the legal minimum. If it can happen to them, it can happen to a small business without a dedicated payroll expert.
How simple errors can lead to considerable issues, for example
• A £23,000 annual salary for a 22-year-old working 40 hours a week seems reasonable, but it equates to £11.06/hour, which falls short of the legal minimum wage
• Salary sacrifice schemes, such as Cycle to Work, can unintentionally reduce earnings below National Minimum Wage for lower-paid employees
• Costs for uniforms, equipment, travel expenses, or rent beyond the accommodation offset, can further reduce pay and cause compliance issues
Hidden costs of doing your own payroll
The cost of running payroll in-house presents significant challenges. Hiring a qualified and experienced payroll manager is expensive, not to mention the additional costs of payroll software and regular compliance updates. Even seemingly straightforward payroll tasks can result in costly errors if processed by someone without sufficient expertise, potentially leading to substantial financial losses.
Underpayments can be common and only a qualified payroll officer will know how to apply the rules correctly, approximately around 85% of payrolls actioned by unqualified personnel will result in errors. Such oversights can severely damage a company's reputation, making it crucial to prioritise qualified payroll management.
Why outsourcing your payroll can be a smart business move
Outsourcing payroll eliminates risks and dramatically reduces costs. In many instances, outsourcing to a professional bureau is up to 40 times cheaper than maintaining payroll in-house. You will be assured your payroll is compliant, accurate and efficient. It also saves time and removes the burden of dealing with software, training and ever-changing legislation. Entrusting your payroll to a reliable provider allows you to focus on what really matters, running and growing your business, with the peace of mind that your employees are paid correctly, on time, and in full compliance with the law.
How can Aston Shaw help?
We will speak with your payroll representative over a quick 10-minute phone call to sense check understanding and your current payroll work practices. This simple audit will give you peace of mind and allow us to advise how we can assist you where necessary.
Justyna, Aston Shaw Head of Payroll, and her Team are here to help and just a phone call away at 01603 616300