The Average Cost To Outsource Payroll Services

Payroll functions are an integral part of any business and it is important that these are carried out with care and accuracy. Since an efficient system requires resources and payroll managers, several businesses opt to outsource their payroll instead of carrying it out in-house. While there are many benefits to this, many must also consider the cost to outsource payroll.

It is difficult to give an exact number when talking about the cost of payroll outsourcing. However, calculations can be made based on the average rates charged by payroll outsourcing companies.

Average payroll cost

Payroll outsourcing services charge between £2 to £6 per employee per month, with charges increasing if you choose additional payroll services. However, these are not the only costs involved with payroll outsourcing.

There is an initial cost involved with setting up payroll services. The payroll system most suited for your business will depend on the size of the business and payroll services required, which means that the installation or setting up charges will depend on the size of your business.

Some payroll outsourcing services may have standard installation charges or a minimum charging fee. Setting up usually costs £2 per employee per month.

In addition to this, you may also be required to pay additional fees for various services and features. These will all increase your payroll cost.

What is the cost to outsource payroll?

The cost to outsource payroll depends on two main factors. Firstly, you need to consider the payroll services you require. In addition to a payroll manager, payroll outsourcing services also offer weekly, fortnightly, four weekly and monthly calculations, real-time information (RTI) and auto enrolment compliance, data collation, and receipts and reports.

The second factor to consider is payroll outsourcing company a business partners with. While price does not necessarily guarantee quality, the level of professionalism and efficiency with which payroll services are offered is often reflected in the amount charged by the outsourcing company.

A business must thus not only consider the past work and expertise of a payroll outsourcing company but also the payroll cost for all required services.

Cost to outsource payroll includes auto-enrolment fees

One of the main things to consider when looking at additional payroll costs is auto-enrolment fees. While it is a time-consuming task, payroll outsourcing services tend to overcharge for auto-enrolment. This is why it is considered among the main additional costs that will increase your overall cost for payroll outsourcing.

Reports can also add to payroll costs

Payroll services can include the preparation and submission of various reports. While some of these reports are required by regulatory bodies, some are prepared because of how useful and valuable they are to the business. These reports can be crucial in decision making and can contain a large quantity of vital information about the organisation.

However, these reports may also cost a lot and increase payroll costs significantly. If a business wants to reduce payroll costs, they can opt out of nonessential reports.

Additional fees

While going through the pricing for various payroll services, you may notice that there are several add-ons that add to the overall cost to outsource payroll. These additional fees can be for printing payslips and receipts, which is a service offered by many payroll outsourcing companies for an additional fee.

While this may seem like a useful service, you may not make use of it, especially if your company keeps digital records and receipts. If your business is not likely to require payroll services like the printing of receipts and payslips, you can opt out of these services and reduce payroll costs.

There may also be other fees added to your total at the end of the year. While these may not be apparent at first, they can add to payroll costs. A business should always inquire about any such fees from the payroll outsourcing company before setting up the payroll system.