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 Lots of businesses are still unaware of the alternative options they have when it comes to payroll management. It is usually assumed that organising payroll internally, with one or a few people managing everything, is the most cost-effective approach for smaller and medium-sized companies.
But, in-house payroll can have numerous disadvantages such as hidden costs and long-term issues, which can affect a company's efficiency and profitability. For this reason, in this post, we will explore the costs involved in managing an in-house solution and outline why you might be better off outsourcing your payroll with a company such as Clockwork Contracting. What Makes In-House Payroll Management Expensive? When it comes to in-house payroll management, there can be a lot of hidden costs that aren’t always visible to businesses at a first glance. Organising your payroll is a complex, tricky skill and there is so much involved in it. It is not just about transferring wages to employees. Over a long period of time, in-house payroll management can lead to extra costs such as;
Compliance Issues As is to be expected, there is a lot of legislation surrounding employee payroll. When your business chooses to manage payroll internally, this will mean that you have to deal with a lot of compliance issues. Doing this can be highly time-consuming and demanding on company resources. It costs lots of money to stay on top of constantly changing laws both domestically and internationally. With an outsourced payroll solution, you won’t face these expenses as there will be full compliance with tax law changes, employment and wage laws, and pension auto enrolment amongst other regulations. The Long-Term Nature of Payroll Management Payroll management can become much more expensive over time, as it is a long-term investment for any business. If you are just beginning in business and you decide to manage your payroll internally, then it will be a long-term cost to your company’s revenue and labour resources. When you outsource your payroll, all of the stress and costs associated with payroll management will disappear, as you’ll have a dedicated service from a specialist 24/7. Trusted Payroll Company in Bromley Now that you know more about all of the costs associated with internal payroll management, if you are searching for a reputable payroll company in Bromley - Clockwork Contracting is the provider to choose. Outsourcing your payroll with us will eliminate all of the stresses, overheads and administrative burdens of doing it yourself. We provide a dedicated payroll manager who liaises directly with HMRC and/or pension providers on your behalf. If you’d like to find out more, then please do not hesitate to contact us today. You can reach us on 0203 0042 262 or email us at [email protected] and we’ll get back to you as soon as possible.
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 Mini Umbrella Companies have been in the news this year, and in this post, we take a closer look at what to look out for when using one of these schemes within your supply chain. It is really important for all businesses to do regular due diligence checks to identify the risks of Mini Umbrella practice. HMRC recommends all businesses do so to remain safe. Keep reading to learn more about the warning signs to remember when it comes to Mini Umbrella Companies.
1. Who Pays the Workers? The first warning sign to look out for is; who pays the worker? Usually, with this type of payroll model, payments are made to workers via randomly named companies, and these regularly change, with no transparency of pay deductions provided. They also require the Recruitment Agency to often submit multiple Key Information Documents for the same worker. Likewise, there is little or no employers’ national insurance paid on the workers’ pay. This is seen by HMRC as tax fraud. Lastly, there can be no evidence of taxes paid by the agency or end client as there are several suppliers. 2. Random Company Names The second warning sign of Mini Umbrella Companies is unusual company names. Workers are normally paid and contracted through different limited companies with strange names. This is because Mini Umbrellas need payroll companies to have limited payroll payments that allow the use of employers’ NI allowance and a bit more above this. 3. Trading Address, Location and Business Activities Thirdly, lots of Mini Umbrella Companies are run from serviced offices, bulk mailbox offices or even offshore. The business type registered at Companies House commonly mismatches with the actual trading group that the workers belong to. 4. Foreign Business Directors Similarly, it is a frequent occurrence that many directors or shareholders are non-UK nationals, non resident and non-tax residents. The workers are unable to interact with them, as some cannot speak English. This makes them a non-compliant payroll solution. 5. Flat Rate VAT Moreover, a high proportion of Mini Umbrella Companies use flat rate VAT accounting to gain additional income without needing to have proper accounting records and systems. Flat rate schemes based on business type effectively increase the Mini Umbrella access to “created” VAT savings. As a result, this is why lots of them have the incorrect business classification at Companies House - it gives them bigger savings. This is a type of VAT fraud and it is an indicator of a noncompliant payroll solution. 6. Abuse of Employers’ Allowance A final warning sign is that Mini Umbrella Schemes are structured to provide several Employment Allowance opportunities through the use of multiple Limited companies. Searching for a Compliant Payroll Provider in the UK? As we touched on at the start of this post, it’s important to do due diligence as the costs of not doing so are very high. If you would like to protect your business, then it’s vital that you choose a compliant payroll solution such as Clockwork Contracting. We are a trusted payroll provider, offering compliant and transparent services to end clients, agencies and contractors. If you’d like to get in touch with us, then please contact us today on 0203 0042 262 or email us at [email protected] and we’ll get back to you as quickly as possible. |
AuthorJack Chinnery - Head of Payroll Archives
June 2024
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