There are a number of reasonably priced accounting programs available for small businesses, with many of them having a “bolt on” optional payroll program, because when buying accounting software it is vital that one piece of software with compatible parts is superior to several programs that don’t really work together.

Using payroll software speeds up the overall process of calculating pay for employees and sorting payments so they can be paid on time. The company really needs to be big to be able to afford a well trained and competent person to operate payroll and follow disaster recovery plans. And even though the software will have the requirements of complex legislation programmed into its operation, it is still important to have a person that understands the process. There is also the need to have a backup person trained to cover staff illness or holiday absences. Any software needs to be accredited under the HM Revenue and Customs Payroll Standard Accreditation Scheme which covers the calculation of tax and NI contributions, sending in the returns electronically, customer service and the handling of statutory records.

Many companies choose to outsource their payroll services even if they manage their own accounting with software. This is because they can focus on employing people for their key business – because managing payroll in-house will take the time of at least two staff that need to be appropriately trained and experienced, because of the need for a backup. Companies also often outsource the Human Resources function also as a small business will rarely be able to employ a HR professional. Self Employed people or contractors often also choose to use umbrella payroll services which also sorts out their tax and PAYE issues.