Payroll Outsourcing in 2024: Key Considerations for a Hassle-free Solution

Hey, accountants, enjoying a breather after a hectic Self Assessment season? Well, you deserve every bit of it. We hate to break it to you, but it’s almost time for another challenge. The payroll season is fast approaching, and while it may be a bit early to get into the groove, we’ve learned from experience that it’s wise to plan ahead, isn’t it?

We aren’t asking you to get buried in files again. Instead, it’s time to leave the heavy lifting to seasoned payroll specialists so that you and your team can focus on the more critical task at hand: attracting new clients, building relationships, and growing your practice.

Payroll outsourcing has always been an integral part of accounting firms’ business, but it has gained added importance after the pandemic and technological revolution. In this blog, we will explore the scope and opportunities for accounting firms in the payroll sector, and how outsourced payroll services can help boost profits.

Payroll: A Well of Opportunity

It’s no secret that accountants have looked at payroll as an unprofitable service for years. There are several reasons for this, as discovered in a recent study. The State of Outsourced Payroll in the UK report by Employment Hero revealed the following perceptions of accounting firms toward payroll.

However, it is a well-known fact that clients’ expectations have changed drastically over the past few years. Instead of outsourcing their operations to multiple providers, clients now seek an entire gamut of services from a single partner firm, making it crucial for accounting firms to include payroll as a part of their offerings.

Also traditionally deemed as an unprofitable service, payroll can actually help significantly boost your firm’s profitability and open new revenue streams for your business.

Payroll Outsourcing: Why Is It Important Right Now?

The UK payroll season is just around the corner. At the same time, it’s a crucial period for accounting firms as they must prepare for the year-end and plan for the upcoming tax year. Now, we don’t need to explain how hectic that will be.

This is where payroll outsourcing services come into the picture. No, we are not going to discuss the usual benefits of payroll outsourcing. Instead, we’ll look at its prominence in a technologically-ruled world and how it can complement cutting-edge solutions to make the service profitable for your firm.

1. Changing Client Expectations

According to the above survey, 81% of accountants agreed that clients’ expectations have changed in different ways over the past year. Payroll is a crucial service that most clients look for when outsourcing functions to their accountant/accounting firm. In this scenario, if you do not offer payroll as a service, you risk losing clients to a competitor, making it important to provide the service with the help of payroll outsourcing companies.

2. Escalating Staffing Crisis

Can we all unanimously agree that the staffing crisis is one of the most long-running and challenging crises in the history of accounting? Hiring new talent is expensive and time-consuming and the global skills shortage and retention crisis have made things worse for accounting firms. Amidst this chaos, outsourced payroll services can offer respite by easily providing access to talented and experienced resources.

3. Technological Revolution

Technology, certainly, is an effective tool to boost efficiency and productivity, but hey, most of us accountants barely know where to start. One of our recent polls revealed that 87% of the UK accountancy firms weren’t fully automated or tech-proficient even in 2023. This is where payroll outsourcing companies can help. These companies are usually updated about the latest tools in the market and have access to it. This makes it easier for accounting firms to integrate the latest technologies into their workflows without incurring massive costs.

4. Innovation & Transformation

The accountant’s role has changed remarkably, especially since the pandemic. They are more than just number-crunchers in 2024; clients now view them as strategic financial advisors. In such a scenario, it is important that you focus on clients, understand their needs, and offer services that are crucial to them by delegating the core activities and paperwork to a payroll outsourcing provider.

TALK TO AN EXPERT

Key Considerations for a Hassle-free Payroll Outsourcing Partnership

The most important aspect of outsourcing payroll is to find the right partner. Now, there are numerous outsourcing providers out there and it can be challenging to pick one. In our decade-long legacy, we have chanced upon several accountants and accountancy practice owners who knew they needed help with payroll but couldn’t figure out the ‘who’ part.

Here are ten key tips to consider when outsourcing payroll:

1. Start planning for the payroll season well in advance.
2. Assess your needs and be sure of what you want to outsource.
3. Choose a provider that best understands your requirements.
4. Try to align company cultures for a smooth partnership.
5. Get a demo of their payroll software and tech tools.
6. Have realistic expectations from your outsourcing partner.
7. Allow time for unforeseen changes from management.
8. Design a detailed service management process.
9. Communicate with your extended team regularly.
10. Consider onshoring for a successful long-term partnership.

Frequently Asked Questions (FAQs)

1. Why Should a Company Outsource Payroll?

Payroll outsourcing allows accounting firms to focus on core business functions, reduce compliance risks, and leverage expertise for accurate and efficient payroll processing. It streamlines operations, enhances accuracy, and ensures compliance, freeing up valuable time and resources.

2. What Are the Pros and Cons of Outsourcing Payroll?

Pros of outsourcing payroll for accounting firms include increased efficiency, compliance assurance, and time savings. However, potential cons may involve dependency on external providers and the need for clear communication to mitigate risks.

3. What factors should be considered when outsourcing payroll to an external provider?

Accounting firm owners should consider factors such as provider reliability, security measures, scalability, and expertise in compliance when outsourcing payroll. Ensuring a seamless integration with the firm’s operations and a commitment to data privacy are also crucial considerations.

Summing Up

The payroll season is a busy but crucial time for accountants. With the new tax year commencing around the same time, it is essential to start planning in advance and account for external support in the form of payroll outsourcing services.

The payroll industry is immense and offers tremendous scope to accounting firms. If you don’t offer payroll as a service, now is the time to make it a part of your offerings. If you provide payroll and are preparing for the busy payroll season, remember that it’s wise always to have extra hands and backups ready. Outsource your payroll paperwork so you and your team can focus on clients better and scale your firm.

QX Accounting Services is a market leader in the outsourcing space and has a legacy of 20+ years in assisting accounting firms to scale through payroll outsourcing. We provide volume-based discounts and a FREE TRIAL to help you assess our services. Connect with us at +44 208 146 0808 or [email protected] to avail the free trial or learn more.