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Questions about small business and payroll, and in particular about how much accountants charge for running payroll is a question that’s asked quite often by small businesses or startups that don’t have the experience of processing payroll in-house, are not sure how to manage payroll for small business or those who aren't quite ready to their outsource payroll.
There’s a huge amount of legislation that associated with payroll – currently over 170 pieces to keep up to date and compliant with – so for some small businesses, using an accountant to process payroll can be a good option to avoid the risk of not being compliant and the potential financial penalties associated with non-compliance.
Accountants tend to be an excellent option for micro-companies – those with 12 employees or less. They can take the stress out of running payroll while keeping small businesses compliant, but still require some input from the business owner or a designated person in the business. Some accountancy practices will run payroll for small businesses from one employee upwards.
We’ve contacted several accountancy firms who have kindly provided information on their pricing for small business payroll:
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Pricing for payroll for small business:
Small business payroll pricing in Leeds
A firm we contacted in Leeds said their charging structure is as follows:
- Administration charge of £20 per month for small business payroll
- £5 per employee per payslip (weekly or monthly)
- Payslips are emailed via PDF and password protected
- The employer arranges and makes payment of the net salary to the employee and deductions to HMRC, pensions and for other benefits
If a pension is needed, the one-off monthly admin charge increases from £20 per month to £30 per month. The other fees and responsibilities remain the same.
Small business payroll pricing in Kent
Another firm that’s based in Kent has a slightly different pricing structure:
- They don’t charge an admin fee for running payroll
- Price for payslips is broken down based per pay run, whether weekly, fortnightly or monthly:
- 1-8 employees - £30 per month
- 9-15 employees - £50 per month
- 16-25 employees - £75 per month
- 26+ employees is a tailored quote
- Payslips are available to employees through a client portal (rather than through a mobile payroll app)
- The employer arranges and makes payment of the net salary to the employee and deductions to HMRC, pensions and for other benefits
- If benefits or pension administration is required, this is an additional £5 per month on each tier in the increasing scale
Another accountancy firm we contacted, also in Kent, had a different structure for small business payroll. They charge one off-fees for the following services:
- Initial set up of the payroll scheme - £80
- Workplace pension scheme set up - £450
- Late filing penalty appeal - £30 per appeal
- £50 per employee to submit a P11D
Their recurring fee structure is as follows:
- If banking services are required (up to 30 employees) - £50 per payrun
- If monthly CIS EPS submissions are required - £20 per submission
- Prices per employee per payslip are charged based on the number of employees in the tiered structure (annual charges):
- 1-3 employees - £540
- 4-6 employees - £720
- 7-10 employees - £900
- 11-15 employees - £1080
- 16-20 employees - £1380
- 21-35 employees - £1800
- 36-100 employees - £2400
- 100+ employees - Quote on request
This accountancy firm provides each of their clients’ staff members access to a portal to access online payslips and P60s. They say, however, that they can cater to each client’s requirements including posting or emailing payslips to staff members if required, for a small additional fee.
All client communication and liaison with HMRC is included in the agreed fixed fee to avoid any surprise costs to the client. They advise that they tailor the work they carry out to each client’s requirements, managing the entire service for some, where others manage elements of the payroll themselves, such as paying their staff.
In all three models shown, VAT is applicable on all services.
Considerations for accounting and payroll services for small business:
Engaging an accountant to run payroll for your small business can be a crucial step in ensuring accurate and compliant management of your employees' pay and benefits. Here’s a list of important things to consider when working with an accountant for payroll for a small business:
Expertise and qualifications: Ensure the accountant you hire has experience and expertise in small business accounting and payroll software. Verify qualifications and/or memberships of the Chartered Institute of Payroll Professionals (‘CIPP’).
Software and technology: Check whether the accountant uses reliable and up-to-date HMRC-recognised payroll software that can handle tax calculations and other necessary functions. Integration with your existing accounting systems can also be beneficial.
HMRC registration: Ensure your business is properly registered with HMRC for payroll purposes. Your accountant can guide you through this process.
RTI compliance: Real-Time Information (‘RTI’) payroll reporting is mandatory in the UK. Your accountant should be well-versed in RTI and capable of submitting accurate payroll information to HMRC on time.
P45 and P60 issuance: Ensure your accountant provides P45 forms to employees when they leave your company, P11D forms for benefits in kind and P60 forms at the end of the tax year. Establish whether this is included in the cost of service or whether additional fees apply for the service.
Data security and GDPR: Payroll involves sensitive personal information. Ensure your accountant follows the GDPR (‘General Data Protection Regulations’) guidelines for data protection and has suitable cyber security in place to protect sensitive employee data.
Fees and services: Clarify the scope of payroll services for small business that your accountant will provide and agree on fees upfront so there are no surprises. This will also ensure that you can budget accurately.
For small businesses and start-ups, using an accountant to process payroll can be a good option. Using a reputable and suitably qualified accountant can ensure a business keeps compliant with over 170 pieces of payroll and benefits legislation as well as ensuring employees are paid correctly and on time.
If you'd like to know more about small business and payroll, we have other information that might be of interest. Your might be larger than a micro company, thinking about using a third-party payroll company but wondering what are the pros and cons of outsourcing payroll. And with so many payroll service providers, it's difficult to know who are the best payroll companies and what do the best payroll providers offer?
Like to know more about payroll software for small business from PayCaptain? Get in touch, we'd love to hear from you!
