Payroll is an important part of business operations, ensuring employees are paid accordingly. Without payroll, businesses would face a range of financial issues, and staff members wouldn’t be paid on time.
Outsourcing payroll is a common practice for most UK businesses – but why? Read our blog today to learn more about the pros and cons of outsourcing payroll services.
What is Outsourcing Payroll?
Outsourcing payroll is when a company transfers its payroll responsibilities to an external payroll service provider. A specialist payroll company or a professional accountant usually completes these services.
By outsourcing payroll, companies can free up time to focus on other important areas of their business, knowing the management of payroll is being handled accurately while remaining compliant.
Is it Common to Outsource Payroll?
Yes, it is common to outsource payroll in the UK. Businesses that outsource payroll can save time and money, focusing more on the rest of their core business operations.
Recent payroll statistics for 2025 show:
- Only one-third of businesses still choose to manage payroll in-house
- Over 90% of businesses in the UK make payroll errors each month
- Two-thirds of small and medium-sized enterprises (SMEs) are expected to outsource payroll
Outsourcing payroll allows for accuracy and compliance – something many businesses may not be able to ensure when it comes to handling employee wages and key tax laws. By outsourcing payroll, there’s little room for errors to occur compared to completing it in-house.
Why Are Businesses Outsourcing Payroll?
Businesses across the UK choose to outsource payroll services for several key reasons, mainly to streamline operations, reduce costs, and ensure compliance throughout. While some businesses continue to handle payroll internally, most companies prefer to leave sometimes-complex tasks, such as payroll, to the experts.
Accountants and other payroll professionals are highly experienced in providing such services, meaning enhanced accuracy. With all business processes, outsourcing payroll comes with its pros and cons.
The Pros and Cons of Outsourcing Payroll
It’s no secret that outsourcing payroll offers many benefits, but it can also come with its potential drawbacks.
| Pros | Cons |
|---|---|
| Time saving | Potential longer resolution times |
| Compliant | Less data control |
| Cost efficient | Hidden fees |
| Minimal errors | Limited oversight |
| Reliable | Dependent on external services |
The bottom line is that although outsourcing payroll can come with some potential negatives, the pros outweigh the cons. For most, outsourcing payroll is highly beneficial, proving to be an excellent business choice to ensure accuracy throughout payroll processes.
Outsourcing any service has potential drawbacks, but that doesn’t necessarily mean they will occur. By choosing experienced and reputable payroll providers, you can reap the benefits of outsourcing such services.
What to Expect From Outsourcing Payroll
While outsourcing payroll, services typically include:
- Payroll requirement assessments
- Payroll processing
- Ensuring compliance
- Data collection
- Accurately and timely issuing payslips
- Creating payroll reports
- Tax filings
- Advice and support
In most cases, the accuracy and attention to detail delivered by payroll providers are difficult to beat. Outsourced payroll services focus primarily on streamlining your payroll operations, which in turn allows for peace of mind knowing such a vital aspect of your business is being handled appropriately.
Any reliable payroll provider, such as an accountant, should be on hand to offer ongoing advice and support when needed while answering any questions or concerns you may have.
How Much Does Outsourcing Payroll Cost?
Outsourcing payroll costs typically varies depending on five key factors:
- The size of your company
- Payroll complexity
- Provider services
- Compliance needs
- Potential added service fees
It’s important to compare providers and complete thorough research to ensure you’re paying the right price for the type of service you require. External payroll providers may charge hidden fees without you realising – this reiterates the importance of discussing all services before agreement and opting out of any unnecessary services.
Key Takeaways
- Payroll is an important part of business operations
- It’s common for UK businesses to outsource payroll
- Outsourcing payroll will streamline operations, reduce costs, and ensure compliance
Do You Require Outsourced Payroll Services?
If you require expert outsourced payroll services, we can help. At LJS Accounting Services, we work closely with a range of clients to provide quality payroll services. With us, you’ll have more free time to focus on growing your business while we handle the side of payroll.
This means peace of mind and less stress for you to deal with. From calculating accurate tax payments to managing National Insurance deductions, you’ll be free from having to deal with lengthy payroll tasks.
We have over 10 years of experience, and our friendly team has a wealth of knowledge in managing payroll. You can rely on us for a personalised and dedicated payroll service like no other.
Don’t hesitate to reach out! If you have any questions about our trusted payroll service, please contact us. We look forward to speaking with you soon.
Keli Evans, Director at LJS Accounting Services, excels in taxation and statutory accounts. With a focus on strong client relationships, she leads a diverse portfolio, overseeing vital financial aspects like VAT, payroll, pensions, and taxation with a holistic and committed approach.
