Are you considering hiring an in-house payroll management team to handle your payroll processes? Well, even if it seems flexible, with enhanced data privacy and control, there are more things that you must account for. This means you also need to hire staff, train them, and utilize accurate accounting software for your use.
This is where service bureau payroll come in. Why hire an entire in-house team, pay for ongoing software subscriptions, and worry about data security, when payroll experts can deliver the same services without hassle? When payroll experts can help you provide just that, without any hassle or worry.
This article takes an in-depth look at the differences between a service bureau payroll provider and an in-house payroll team, helping you determine the best fit for your business.
A payroll bureau can be considered a service provider that manages your payroll processes. They are responsible for calculating and paying all your employee wages, paying employee taxes and managing workplace pension schemes.
The payroll bureau is often mistaken for a form of partial payroll outsourcing; however, it actually involves completely outsourcing your payroll functions and responsibilities to third-party experts.
Here’s what you need to do if you have bureau payroll in place for your company
When using external payroll services, you’ll need to send your employees’ hours, including check-in and check-out times, along with other relevant details.
The payroll bureau services will handle all compliance with HMRC. Payroll management services help you handle complex legislative tasks such as Real Time Information (RTI) submissions, auto-enrolment of pensions, and National Insurance contributions.
A payroll bureau has all the necessary tools to manage your payroll processes. Tools like Bright Pay, QuickBooks Payroll, and more can be used by payroll bureau services.
Outsourcing to a payroll bureau eliminates the need for in-house systems, software, and salaries, delivering cost savings from day one.
Expert payroll providers stay updated with the latest HMRC regulations, ensuring every submission and deduction is legally compliant.
With specialists handling your payroll, there’s no need to train internal staff you get instant access to professional-grade expertise.
Automated processes and expert handling reduce admin time, freeing up hours you’d otherwise spend on calculations, filings, and corrections.
Top-tier payroll bureaus use secure, cloud-based systems with automatic backups so your payroll data is safe, retrievable, and always available, even in a crisis.
Pros | Cons |
You have full control over how payroll is done | It requires training your office staff |
You can get payroll info and reports right away | Your team must keep up with changing tax laws |
Payroll can be customized exactly how your company needs it | Mistakes can happen if your staff isn’t experienced |
Employee data stays within your company | You have to pay for payroll software |
Works smoothly with your other HR and accounting systems | Harder to handle if your company grows fast |
Your team learns your company’s payroll needs well | Your team is responsible for following all rules |
Can easily handle unique pay situations and policies | Payroll slows down if key staff are absent |
An in-house payroll means that you hire an entire team internally to manage your business payroll. You need to have your own staff, train them in your business structure, and implement key payroll software. You will also need to calculate tax on employee wages and file taxes on their behalf to HMRC.
An in-house payroll management includes the following features for your company:
Internal Payroll Management: Your company’s payroll is managed by HR or your company’s accounting department.
Full Control Over Your Expenses: Managing payroll in-house gives you complete control over the entire process, from data entry to issuing employee payments. This flexibility allows you to adjust your processes as needed and implement corrections immediately.
Always Check for Latest Payroll Compliance: Your in-house payroll team always needs to check the latest regulations from HMRC to ensure they remain compliant. So, you are now responsible for updating all the legal and HMRC reporting.
Managing payroll internally means your sensitive employee and financial data never leaves your company’s secure environment, reducing risks of breaches.
With in-house payroll, your team can generate, and access detailed payroll reports immediately without any delays or waiting on external providers.
For larger organizations, handling payroll internally can reduce ongoing vendor fees and leverage existing staff expertise, resulting in significant cost savings.
Your dedicated internal payroll team understands your company’s specific needs and culture, providing trusted and personalized payroll management.
In-house payroll allows you to customize processes and policies that align closely with your company’s mission, culture, and employee expectations.
Pros | Cons |
Saves your team time by handling all payroll tasks | Less direct control over payroll process |
Experts ensure compliance with tax laws and HMRC | You must trust the bureau with sensitive data |
Reduces risk of payroll errors and penalties | Can be costly, especially as business grows |
Predictable, fixed monthly or per-employee fees | Limited flexibility for highly customized payroll |
Access to latest payroll technology and updates | Dependence on vendor’s timelines and support |
Scales easily with your business size | Switching providers can be complex and disruptive |
Frees up your staff to focus on core business | Potential delays in resolving issues |
Whether you should go with a bureau payroll service or an in-house payroll depends largely on the size of your business, available resources, as well as the priorities of your business. If you operate as a small or medium-sized enterprise with little payroll experience or resources, outsourcing payroll to a payroll bureau is usually what works best. It’s a time saver, lowers compliance risk, provides predictable costs, and you just don’t have to buy any software or training.
On the other hand, larger companies tend to have more complicated payroll requirements and may benefit from in-house payroll. This provides them with total independence, flexibility to tailor payroll processes, and efficient access to critical information.
Managing payroll in-house comes with a wide range of costs. You will need to pay yearly payroll software subscriptions, which may range from £20 to £200 per month. Additionally, you will have to pay £2–£5 per hour for every employee you hire.
Not just that! The significant time required for payroll processing is also important to account for. Your HR or accountant will have to spend at least 5 hours daily on your payroll processes along with regular training and compliance updates.
On the other hand, the service bureau payroll will cost you somewhere between £20 to £150 per month. In the long run, it’s often more cost-effective, as it eliminates expenses related to software, staffing, and compliance risks. Bureau payroll also has the capability to scale with your business and doesn’t require you to have any resources, making it a suitable option for small-scale businesses.
Small businesses often face the question of which payroll system to implement. Well, this blog discusses in detail when to hire an in-house team and when to hire a payroll bureau. In general businesses prefer to hire payroll bureaus because they don’t have to hire and manage employees. Additionally, they also consider it cost efficient without any software subscription to pay. Thus, choosing a payroll bureau is quite a better option for businesses.
A small business or large enterprise looking for the best payroll system for small business? Lanop Business and Tax Advisors makes your payroll a plain sale for you. So, wait no further and get our payroll bureau services UK now!
Hiring a payroll bureau is a more cost-effective option, since you don’t have to pay for the software subscriptions or hourly wages of in-house employees. You just have to pay a lump sum amount which costs you considerably less than hiring an in–house payroll team.
As a small to medium-sized business, looking to save money and avoid the challenges of compliance and software management, go with service bureau payroll. Choose in-house payroll if you’re a large company, if you need total control, customization, the ability to integrate with your internal systems, and if you can manage it.
Yes, an average payroll service bureau is safe and compliant. Several payroll bureaus invest heavy revenues into robust security features to safely handle sensitive data and keep abreast of current tax laws and employment legislation, allowing you to comply with HMRC and other statutory bodies accurately.
Yes, Service Bureau payroll is capable of supporting sophisticated payroll needs, such as multiple pay rates, benefits, bonuses, and deductions. Bureaus know how to handle complex payroll environments by adopting the latest systems and experienced employees. This is how they maintain an accurate payroll, even for companies with complex or consistently changing payroll structures.
It normally takes about 2 days to a few weeks to transition to a service bureau payroll, depending on the complexity of your payroll system. It requires gathering employee data, setting up the bureau system, training staff, and ensuring compliance. Many bureaus partner with businesses to transition smoothly and seamlessly with limited downtime.
Aurangzaib Chawla is a seasoned financial advisor and Managing Partner at Lanop Business & Tax Advisors. He specialises in empowering SMEs with Virtual FD/CFO services, turning real-time financial data into practical business insights. By moving clients beyond historic year-end accounts, Zaib ensures they gain clarity, optimise cash flow, and make confident decisions that drive profitability.
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At Lanop, I am providing my services as the Managing Partner and Tax Specialist. My expertise includes helping medium and small-scale businesses in their accountancy and legal requirements, business start-up support, strategic review, payroll system review and implementation, VAT and tax compliance to cloud accounting. I am also an expert in financial reporting, identifying and monitoring risks, strategic business development, client retention, market acquisition and deals closure by carefully planning my sales cycle.
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