7 Good Reasons to Leave your Payroll to the Professionals
Payroll is a complicated, mandatory business function for any business. For retailers, it is even more complex. You have employees on salary and you have employees on hourly rates, scaled and overtime rates, not to mention shift changes or no-shows.
All this complexity adds to the time it takes to do payroll. Add to that the continuous changes to tax credits, allowances, benefits, emergency tax bands and cut-offs, it is a job in itself trying to keep up.
With a new year dawning and new goals being set, now is a good time to re-examine your payroll requirements. Payroll is an overhead but it doesn’t have to be an expensive one.
Here are seven areas to consider when making an informed decision about whether to continue with your in-house payroll or outsource it to an accountant who specialises in retail payroll.
1. Cost of Payroll
Payroll can be costly to your retail business from a time perspective. Gathering information about employee’s hours, shifts, shift changes, holidays, overtime and individual benefits takes time.
Analyse how many hours are spent gathering information for payroll, preparing the payroll and running the payroll. Include the admin hours of filing tax returns, distributing wage-slips and answering queries from employees.
You might be amazed at the hours that are clocked up especially if you run payroll on a weekly basis.
2 Efficiency of Finance Staff
If you do the exercise as outlined in step no. 1, you will find that payroll is a time-consuming exercise. Removing payroll will in turn free up your employee’s time, for other work better spent in your business.
If you have an in-house accountant or accounts clerk doing your payroll, imagine taking away those hours of doing the payroll and spending it more productively on preparing and analysing your day to day and monthly accounts. Keeping up to date with your financials will help identify monthly gross margins and allow you to produce current reports on liquidity ratios, cash-flow statement and KPI’s to name a few.
3. Accuracy of Payroll
If you are not doing payroll day in day out, then there is a high chance that you could get it wrong. The onus is on you as the employer to ensure the correct amount of taxes are deducted, in terms of PAYE, PRSI, USC, LPT etc and returned to the Revenue on time. Getting it wrong opens you up to trouble with Revenue. The last thing you need in 2015 is being liable to pay Revenue penalties and back pay for making a payroll mistake, not matter how small.
There are so many dates and returns to be aware of. Tax credits and P2Cs which the Revenue sends electronically through-out the year must be imported into your payroll system. It’s imperative that all staff are paying the correct amount of relevant taxes.
Keeping track of important dates such as P35 returns (February 15th) is incredibly important, as is ensuring that your P60s are generated and distributed to staff at the beginning of the year.
4. Sick Pay and Disability pay
Sick & disability pay is one of the most complex areas when processing payroll. In the retail sector, due to the nature of employment, you do face more incidences of these types of pay. It’s important to get it right. For example, where an employee is entitled to sick pay or ‘job illness benefit’ from Department of Social Protection, that amount is now taxable and must be entered in the payroll system. The onus is on you to ensure all payroll deductions are correctly applied.
5. Holiday Pay Entitlements
Similarly, not all holiday pay is created equal. Everyone is entitled to holiday pay and days off, it just depends on how much work is done in the leave year and how it is calculated. It could be 8% of hours worked or 4 weeks off or one third of a working week. And you need to know what days are considered ‘working hours’. For example, sick hours are not included but maternity leave and parental days are.
6. Continual Training and Best Practice
Anyone who processes your payroll must be continually trained in payroll. Every year, there are new changes introduced in the budget which affects payroll. Take for example the property tax. That’s now going through payroll which is another deduction to work through. So your staff needs to be up-to-date with the obvious (and not so obvious) annual budget changes which affects payroll.
And it’s not just budgetary changes that you ought to be aware of, there are also employment rights and NERA compliance to consider as well. The second last thing you don’t want in 2015 (after a Revenue penalty pay-out) is a NERA visit. Payroll can assist you with your compliance.
Confidentiality is of key concern when processing payroll. You must have 100% peace of mind that best practices are in place. When you outsource, that confidentiality is guaranteed.
7. Contingency Planning
As a business owner, you hope that all your staff are in full attendance for work as usual. But payroll is a function that needs to be done on a weekly, bi-weekly or monthly basis. There is no exception. Your employees need to get paid. If your employee who processes payroll is out sick for a few days, then your payroll and your employees will be affected.
To conclude, it’s really your decision to continue with payroll in-house but make sure it’s an informed one. For most businesses, your wage bill is your biggest bill, so it’s important to get it right.
Angela Garvey is an accountant that specialises in retail accounting and affordable payroll solutions for the SME Retailer. A Preferred Supplier with Retail Excellence, Angela runs AG Associates Accountants and works with some of the leading retailers in the country. For further information please contact Angela at angela@agassociates.ie or 021 4824723 website: www.agassociates.ie.