Mastering the Payroll Processing: The Ultimate Guide for UK Accounting Firms

You would agree with us that a payroll team has the power to make or break a firm. We say this because the payroll team is responsible for ensuring that employees get the correct pay on time. When this responsibility is conducted well, it motivates your client’s employees to do well, thus increasing their business efficiency. Making proper payments to employees is one of the most sensitive and time-consuming process. When your payroll team maintains that accuracy, it makes your accounting firm look reliable and your clients compliant with all the payroll legalities.

These days, the majority of businesses in the United Kingdom have delegated the responsibility of running the payroll show to accounting firms. They have done this to save time and allow the experts to streamline the process. However, UK payroll regulations are becoming increasingly complex to follow, and we have noticed that even accounting firms like yours are feeling the strain. For this reason, we have taken the liberty to create a guide to explain payroll processing, its challenges, and how to quicken the process in an elaborate way. Let’s get going.

What is Payroll Processing?

Under payroll processing calculations are made of employee’s salaries, deductions, and taxes and then ensuring the salaries are paid to the employees on time. The responsibility of doing the payroll processing falls under the HR or payroll department. They ensure that all the UK payroll regulations are met and payments are done smoothly and on-time.

The payroll calculations are a time-consuming and complicated affair, it involves managing multiple aspects such as pay scales, employee classifications, promotions and terminations. Along with that the increasingly complex payroll regulations has increased the possibility of errors which will be detrimental not only to the client’s employee’s but also on the reputation of your accounting firm.

To handle these complexities and to give the best of services to your clients, you can explore the option of payroll outsourcing services offered by professional accounting outsourcing service providers. But more on that latter, for now let’s understand the types of payroll processing and which one will be ideal for your client.

Types of Payroll Processing: Which One Suits Your Client?

There are multiple types of payroll processing from which you can choose from. But we have narrowed it down to a few which are quite popular. It is important to note that you must choose the type of payroll processing based on the client’s business size and requirements.

Here are the following popular types of payroll processing:

In-House Payroll

Under in-house payroll, you will be managing all your client’s payroll by yourself through your payroll team. This payroll team is ideal for your clients that have few employees, and the payroll requirement is simple. The main advantage of in-house payroll is the direct control you will have over payroll data, thus making sure there is no authorised access. However, it is a time-consuming process that requires expertise in payroll regulations and increases the chance of payroll errors.

Outsourced Payroll

Payroll outsourcing is a popular type which is increasingly being preferred by accounting firms and businesses in the UK. These third-party service providers have expertise in offering specialised services in payroll. Currently, UK payroll regulations have become increasingly complex and time-consuming and ensuring compliance is becoming difficult. To reduce this pressure, accounting firms are increasingly preferring to outsource.

When you outsource payroll to a professional service provider like Corient you will get access to payroll experts and enjoy improved accuracy and compliance with UK laws such as PAYE and RTI. With outsourced payroll you will not require to hire or expand your in-house payroll team leading to cost saving.

Payroll through Payroll Software

Getting payroll done through payroll software will give your advantage related to automation of payroll calculations, tax filings and payroll processing. These days most of the payroll processing is done through payroll software because it saves time and cost and reduces errors. It also ensures full compliance with the latest UK payroll regulations and integrates with accounting systems with ease.

Manual Payroll

It is an old way of getting payroll work done without any use of software and automation tools. While it is ideal for those clients who have 1 or 2 employees making it cost effective for them. But for others it is prone to errors, very time-consuming, and cannot be scaled immediately when the need arises.

Payroll Processing Time: How to Speed Up Your Workflow

You clients will expect from you to speed up their payroll processing but let’s face it that it is a time-consuming process. Clients will also not appreciate you cutting corners to speed up the process which will increase the chances of errors leading to compliance issues. You will be expected to find a balance to speed up the payroll processing time without ignoring the quality, thus keeping your clients employees satisfied.

To help you out, we have listed down strategies to follow:

Give Preference to Automate Payroll Processing

Manual payroll processing is a labour intensive and time-consuming task. One can go along with it if it was not so error prone. Since your clients time is valuable we will suggest you to automate the task by investing in payroll software. A payroll software will automate your tasks such as tax calculations, deductions, and overtime payments.

One more advantage of payroll software is it will ensure full compliance with HMRC’s latest regulations, thus reducing the chance of human error. Payroll software such as BrightPay, Xero Payroll, or QuickBooks Payroll can be beneficial in speeding up the payroll processing. However, operating it requires experience which your team may currently not have in a situation like this you will have to take the help of payroll outsourcing services.

Through the best payroll outsourcing service provider, you can avail their payroll services and get access to the latest payroll software without buying it. This way, you can reduce your processing time, save money, and offer the best of services to your clients.

Make Statutory Compliance Easy

Keeping a tab on the latest updates in UK payroll regulations is a daunting task, and changing tax rates and reporting responsibilities have added to the complexities of the payroll process. But you can make compliance easy by investing smartly in the best payroll software. Payroll software will automatically adjust with the latest payroll rates and deductions accordingly.

Additionally, by investing in payroll software you will be in a position to handle various other statutory requirements, such as pension auto-enrolment. The software will also help you in streamlining the process, save time, and avoid manually handling complex payroll regulations.

When payroll software makes statutory compliance easy, you will reduce the risk of non-compliance and related penalties for your clients. The time saved by simplifying statutory compliance can be focussed towards other priority tasks.

Making Employee Self-Service Available

Getting the queries of your client’s employees resolved will consume a considerable amount of time and most of it related to their payslips, benefits, and documents. Such recurring queries can be avoided by empowering the employees by giving them access to managing their payroll information.

By giving your clients access to payroll software their employees can themselves check and download their payslips and other payroll related documents. The employees can update their personal information and reduce the burden of your payroll processing team.

When your clients get easy access to their employee information, historical payslips, and tax deductions, and they track their employees annual income, transparency increases. Such a service will not only save you time but also increase satisfaction among your clients and employees.

Focus on Real-time Reporting

Your clients will appreciate your effort to give them real-time insights through reports, which will help them make informed decisions. You can give access to payroll reports which contain various aspects of payrolling such as employee earnings, tax deductions, and pension contributions. These reports can be customised as per your client’s requirements and visuals in the form of graphs can be added to make it easier to understand. You can prepare some templates beforehand which will make report generation easy.

With real-time report generation capabilities in place, you can reduce the chance of data manipulation and aid in your client’s decision-making process.

Delegate or Outsource Non-Core Tasks

If handling payroll processing for multiple clients is overwhelming, consider outsourcing certain tasks to a payroll specialist. It frees up time for your team to focus on advisory or value-added services. Partner with a reputable payroll provider like Corient who has gained trust of multiple accounting firms by not compromising UK employment and tax regulations compliance.

Implementing Efficient Payroll Approvals

Getting approvals for payrolls and ensuring a smooth workflow will become your biggest hurdle, especially when multiple approvals are needed. Such a situation will slow down your process and cause inconvenience to your clients. Don’t even think about manually handling it because it involves handling multiple paper documents, which can further slow down the process. To overcome this situation, you will have to invest in workflow features and streamline the whole process.

You can prepare the rules for approval at each level and using tools you can route the payroll-related approvals to the appropriate individuals if they meet the criteria. Alerts will be sent to ensure timely processing and reduction in delays. By implementing efficient workflow approvals there will be a reduction in processing delays that will not only improve your productivity and accuracy but that of the client too.

Common Payroll Processing Challenges in the UK

While processing payroll for your UK-based clients, you must have come across some formidable challenges. We have done some research and have listed down a few of those challenges that trouble multiple accounting firms on a frequent basis. Having a deep understanding of these challenges will enable you to be better prepared to tackle them. Let’s go through those challenges:

Legal and Statutory Challenges

The main challenge for your accounting firm and your clients is to stay in the good books of HMRC by staying compliant with the payroll regulations. But the UK payroll rules keep updating and are complex, creating a confusing situation. There are increased chances of making an error even after taking all the precautions, especially in the manual process.

To overcome this challenge, you will need payroll processing software that will automate your payroll and stay updated with the latest regulations. For extra precaution and to stay one step ahead of your competitors you can avail this software from a payroll outsourcing service provider.

Payroll Tax Challenge

Like payroll regulations, the payroll tax rate keeps updating, and based on that calculation, tax from the employee’s salary has to be made. At the same time, you will have to ensure that your client is paying its share of payroll taxes accurately making it a burdensome responsibility. Any mistake in the calculations will lead to serious consequences for your client and its employees such as penalties, and legal hassle. It will also damage the reputation of your accounting practice which must be avoided at all cost.

By investing in payroll software, you can overcome this challenge and stay informed about tax changes, thus enabling you to make accurate records and calculations. You can also explore the option of getting expert help through payroll outsourcing services.

Handling of Data and Reporting

You are handling hundreds or thousands of pieces of important data related to payroll. The payroll data will include personal information of employees, pay rates, and more. Any mistakes will make your client and its employees upset leading to legal problems. Furthermore, you will be having an added responsibility of safeguarding the data from cyber criminals. Any negligence will lead to data breaches, damaging your practice reputation.

To avoid such a situation, you must implement user access controls so that only authorised people get access. Get all the records in the digital format and ensure all the information is encrypted.

Flexibility in Payroll Services

Your clients may have a change in their work schedules and accordingly you will have to adapt your services to meet their requirements. If you are doing it manually then it would lead to delays which will negatively affect your clients and your payroll staff. However, by being tech-savvy you can overcome this challenge.

Payroll Accuracy

Mistakes can happen anytime but in payroll you cannot afford it because it affects your client’s employees negatively in the form of penalties from HMRC. Hence, it is important to maintain accurate payroll records which can be done by automating data entry.

Cost of Payroll Operations

If managing payroll for your clients is a challenging task, then handling its payroll costs can be even more challenging. While performing payroll operations, you will incur expenses such as your payroll team’s salaries, payroll software fees, and so on. Also, you will face penalties due to payroll errors, which must be taken into consideration. That’s why payroll expenses must be kept under control, and for that, you will have to understand the cost of payroll outsourcing, which will surely reduce your payroll cost burden.

Benefits of Using Payroll Processing Software

It is safe to say that payrolling is an important responsibility that must be carried out with perfection. To ensure that you will have to keep your team members motivated by paying them well and accurately, this way you can avoid poor performance and avoid mistakes that lead to legal hassles and penalties.

Your clients will be demanding quality and fast payroll services, and for that, you will have to invest in payroll processing software. A good payroll processing software will help you in carrying out payroll tasks with speed, accuracy, and confidence.

Thanks to the benefits offered by payroll processing software, it is being increasingly trusted by accounting firms in the UK. Some of the major benefits are as follows:

• It will execute the payroll calculations in a faster and more accurate way
• Payslips will be generated accurately and made available in digital format
• Sending returns to HMRC and printing P45, P60 and other forms for your client’s employees
• Automating important accounting functions like year end reporting
• Taking over the maximum burden of compliance related to payroll
• Tackle complex payroll regulations on your behalf
• Keeps a digital record of payslips and annual reports, which are easily accessible to your clients and employees

Top Payroll Processing Software for You

Payroll processing software has made life easy for everyone whether it is accounting firms, payroll experts, accounting practices, and clients. Thanks to its utility, everyone is placing trust on the payroll software but there is a catch. There are multiple payroll software available in the market each with its speciality and you are required to choose the one that is ideal for you or else it could degrade your payroll performance.

Take a glance at the top payroll software available in the market:

• QuickBooks Payroll
• Xero Payroll
• Sage Payroll
• Papaya Global
• Rippling
• Intuit Payroll
• KashFlow
• FreeAgent
• MoneySoft Payroll Manager

It’s understandable that getting and training your team on these advanced tools will cost you money. So, what about trying an option that will cost you less but give the same benefits? We are talking about outsourcing. A professional payroll service provider like Corient is experienced enough to run these tools. To get a better understanding of their experience, you can go through their case studies.

Frequently Asked Questions (FAQ)

Conclusion

The basic aim of this guide is to help accounting practices in perfecting their management of payroll processing. Our goal is to make your payroll processing more efficient, less time-consuming, and more output-oriented. By understanding payroll processing, its challenges, and how to quicken the process, you will be in a position to make your accounting practice more attractive to your clients. We have also elaborated on the payroll processing software and how its use will further make your payroll processing efficient and accurate.

However, if you are still finding it difficult to speed up your payroll processing time then we would suggest you take the help of a payroll outsourcing service provider. There are many service providers in the UK that offer payroll and other accounting outsourcing services but none is as proactive as Corient.