Small business payroll: software, accountant or managed partner?
For an owner-manager, payroll feels straightforward until it depends on one overloaded person. The aim should be the least complex operating model that reliably handles your employees, not the biggest managed-service contract.
| Situation | Most sensible first option | Why |
|---|---|---|
| 1–5 salaried employees, few changes | Software with competent internal owner | A managed retainer may cost more than the work saved |
| 6–20 people with occasional changes | Accountant or small payroll bureau | External processing can reduce key-person dependency |
| 20–100 employees, growing workload | Managed outsourced payroll review | Regular controls and an agreed help route become more valuable |
| Multi-site or weekly variable pay | Specialist team with defined cut-offs | Timeliness and exception management can dominate the workload |
These are buying heuristics, not qualification limits or proof of savings. A small employer with complex statutory matters may require more specialist support than a larger firm with very simple salaries.
Five signs that it may be time to outsource
- One person's absence can delay payroll.
- Payroll corrections and chasing managers take more time than calculating pay.
- Employees routinely query errors that should have been caught at review.
- Your payroll software is technically adequate, but nobody owns recurring checks.
- You need a documented process for starters, leavers, pensions and HMRC submissions.
If none applies, improve your internal process first. Keep an exception log and put a second person in place for approval. You can outsource later if the workload warrants it.
What the employer still needs to do
An outsourced partner depends on timely accurate starter/leaver information, approved variable pay, correct pension decisions and a person authorised to review final figures. HMRC's payroll reporting requirements apply whether processing is internal or outsourced.
For smaller teams, avoid paying twice for overlapping accounting and payroll tasks. Decide whether you want the accountant to handle payroll alongside bookkeeping or prefer a dedicated bureau. Confirm who produces the payroll journal for the accounting system.
A plain-English example
A hypothetical 35-employee business runs monthly payroll but has several employees changing hours and a part-time bookkeeper who handles all calculations. A provider might calculate payroll and prepare variance reports, while the bookkeeper continues to collect approved data, review outputs and release salaries. The arrangement reduces the processing workload but does not eliminate internal responsibility.
Get the quote you can actually compare
Ask for the monthly fee, exact number of included runs, onboarding cost, pay frequencies, how employee changes are billed, what happens with off-cycle corrections and what support is included. An apparently low £-per-payslip offer can be poor value if each unusual pay element generates another charge.
See our transparent cost model and managed service specification. If the operation is more complicated than the employee count suggests, describe it here.