In this guest blog post, Xero weighs up the pros and cons of using a trained payroll advisor versus an internal specialist – and explores how online technology can help manage the process

A critical function, small business payroll can be complicated and must always be well managed. Any mistakes risk harming employees and their trust in the firm, as well as having legal implications where tax and National Insurance are concerned.Payrollimage2copy

Depending on the internal resource available – and the scale of the business – outsourcing the process to an external specialist can make sense. Managing the payroll will invariably be time-consuming and must take into account changing factors and tax requirements, making it one of the more complex aspects of small business accounting. Rather than get frustrated, seeking expert advice will release them from the burden, putting what can be complicated tax obligations in the hands of an expert.

However, with some payroll services coming at a premium, cost can be prohibitive – especially for businesses in their early stages. Outsourcing may also mean losing control of confidential and sensitive staff information with the risk that, if communication lapses, mistakes could be made. Likewise, business owners don’t have direct or instant access to payroll, making it harder to check information and add anything that’s missing.

All of which makes recent advances in payroll technology good news for small businesses looking to streamline the process. By building payroll into small business accounting software, it is possible to automate many of the manual aspects – saving time, effort and cost.

As a minimum, payroll applications should be able to provide smart and speedy pay runs and automatically calculate the required tax for employees. Some software also features employee portals where staff can enter time sheets, apply for leave, and view payslips online, again culminating in a huge admin saving.

As with any investment, it is important to explore the best tools and research the latest options for payroll technology. Equally, it can be a good idea to seek advice from an accountant on what the best fit for the business may be.

With a smooth, efficient payroll system in place, small business owners and their teams stand to benefit from less time spent worrying about tax requirements and more time delivering for customers and growing their businesses.

For more on Payroll in Xero, see: