Payroll bureau vs your own payroll software?

A payroll bureau is a company that is an agent for PAYE purposes and processes payroll for another company. There are many providers out there from large established companies such as Moore Pay to one person payroll specialists with their own companies. This is because running payroll can be done fairly easily if you know what you are doing using accountancy software or specific payroll software focused on payroll bureaus that enable one account to process payroll for other organisations.

Payroll software covers a range of functions and have been designed for a variety of users in mind. Payroll software that is embedded in accountancy software is typically focused on companies with very few employees who don't need any kind of self-serve access to the data. The employees may not log into their system to update address, tax codes, but they may simply let their manager or employer know and he or she would then update the system. This is fairly simple but does become admin burdensome when more people are in the company.

Some payroll software such as ShiftAI's Payroll & HR are made specifically to enable a payroll that you can run yourself, other software such as BrightPay enables payroll bureaus to use the software to process the payroll for you.

HR software is very useful for keeping employee information stored and up to date. When an employee moves address or changes his or her phone number, then it has to be updated. If you have good HR software such as Charlie HR or Hibob, employees will be able to login to their portals and update the settings themselves. A lot of HR information has to do with storing employee information such as time off taken, emergency contacts, addresses, important documents such as employment contracts or right to work documents. As this information is pretty important, keeping track of the data becomes quite consuming without software that organises and stores this data and conveniently lets employees update their own data without having to get someone else to do the admin such as an HR administrator.

Payroll software require a lot of data for the people who are getting paid in a payroll run. This information can be manually entered into the payroll software or if you use both a payroll software and HR software that both have API integrations, that your payroll software will automatically be able to pull the information from your HR database for it to construct the employee profiles which are to be paid.

Payroll software usually has integrations with accountancy software products that enable them to automatically journal payroll runs so they can be recorded in the company accounts. If there isn't an API integration, then often you will be able to download a CSV and manually add the journal to your accountancy software. The benefit of the automatic journal is that the process takes seconds and removes the possibility of an error when transcribing information from one system to another.

Using payroll software is usually a DIY process, meaning that you are responsible for making sure you added all the details correctly and that the software that calculates. Using a payroll bureau, you would provide the exact same information that you used but there would be a check. For example, when using payroll or hiring someone, you would check the right to work documents yourself, for example by looking at someone's passport or national insurance card, and then scanning it and storing it. A payroll bureau might check that you have the documents scanned and request them from you.

So, what's the difference? The difference is that someone will be there to put a check on your rather than you having the discipline to check that you are following processes correctly. When you have more employees, this may useful as the administrative burden increases. With HR and Payroll software, a member of your own team could do these checks and onboard and manage the process which could be done far cheaper than using an external service and also provides additional control over the entire process.

The choice of running your own payroll, which is increasingly becoming popular, as software automation is making the process very simple and cost effective or contracting a professional payroll specialist or payroll bureau depends on the pros and cons of each for your specific situation. Using your own software gives you control, autonomy and is cost efficient. Using a payroll specialist takes away some of the admin and responsibility but costs more.