Is an accountant essential for payroll? Or can you do it yourself?

Small businesses are increasingly opting for payroll software to simplify payroll management and processes. When it comes to paying your team,  it's all about efficiency, accuracy, and keeping costs under control.

Traditionally, many businesses relied on accountants to manage payroll, ensuring compliance with tax laws and offering valuable financial insights. However, modern payroll software is changing the game by providing a streamlined solution that can save you time and reduce administrative headaches.

As a business owner, you understand how important financial decisions are for your business’s success and growth. One key decision you might be weighing is whether to stick with your accountant (if you have one) for payroll or use a dedicated payroll software.

Each option comes with its advantages. That’s why we’re going to explore the benefits and considerations of both. By the end, you'll have a clearer picture of which approach might suit your business best.

The role of accountants in payroll management

Accountants have long been integral to the smooth operation of payroll processes within businesses. Their role extends beyond basic number crunching to encompass critical responsibilities that ensure financial accuracy, compliance, and strategic decision-making.

Here's a closer look at why accountants have traditionally been considered essential for payroll management:

Ensuring compliance

One of the primary responsibilities of accountants in payroll management is ensuring compliance with tax regulations and employment laws. They are adept at navigating the complexities of payroll taxes, deductions, and reporting requirements, thereby minimising the risk of penalties and audits.

Accuracy in payroll processing

Accountants bring a meticulous approach to payroll processing, ensuring that employee salaries, taxes, benefits, and deductions are calculated correctly and promptly. This attention to detail not only prevents errors but also builds trust and reliability among employees.

Expertise in tax advice

Beyond payroll processing, accountants provide invaluable tax advice tailored to the business's financial situation. They optimise tax strategies, maximise deductions, and assist in strategic financial planning to minimise tax liabilities while remaining compliant with tax laws.

Financial insights and reporting

Accountants play a crucial role in generating financial reports that offer insights into the company's financial health. By analysing these reports, business owners can make informed decisions about budgeting, forecasting, and resource allocation.

Strategic financial guidance

Beyond day-to-day payroll management, accountants act as strategic advisors. They help businesses understand their financial position, identify growth opportunities, and implement financial strategies aligned with long-term goals.

Can small businesses manage payroll themselves?

Yes, small businesses can effectively manage payroll independently with HM Revenue & Customs (HMRC) recognised payroll software.

Today's payroll software is designed to be intuitive and easy to use, making it accessible for entrepreneurs who aren't financial experts. These platforms automate payroll tasks like calculating salaries, taxes, and deductions, ensuring accuracy and compliance with tax regulations without the need for specialised skills.

Beyond ease of use, payroll software offers cost-effectiveness. It operates on subscription models, allowing businesses to pay for only what they need, saving on the expenses of hiring a dedicated accountant. This affordability is especially beneficial for small businesses looking to optimise their budget and allocate resources efficiently.

Payroll software also grows with your business. It scales effortlessly as your team expands, seamlessly accommodating more employees and evolving payroll needs. This scalability ensures the software remains a reliable solution throughout your business's growth trajectory. 

So, while accountants provide valuable financial strategy and compliance expertise, modern payroll software empowers small businesses to manage payroll independently and efficiently. By simplifying complex tasks, reducing costs, and supporting growth, payroll software enables business owners to focus on what matters most—driving their business forward.

Benefits of using payroll software for small businesses

For small businesses, leveraging payroll software offers a range of benefits that streamline operations and enhance financial management:

Simplified payroll processing

Payroll software simplifies the entire payroll process, from calculating salaries and taxes to generating pay stubs and filing tax forms. With intuitive interfaces and automated features, businesses can handle payroll tasks efficiently without the complexity often associated with manual calculations.

Ensured compliance

Staying compliant with tax regulations and labour laws is crucial for businesses of all sizes. Payroll software updates automatically to reflect changes in tax rates and compliance requirements, reducing the risk of errors and penalties. This ensures that businesses remain on the right side of the law without needing extensive tax knowledge.

Automated calculations

Accuracy is key in payroll management, and payroll software excels in automating calculations for salaries, taxes, deductions, and benefits. By eliminating manual input and human error, businesses can trust that their payroll data is accurate and consistent every pay period.

Cost-effectiveness

 Compared to outsourcing payroll to an accountant or payroll service, using payroll software is significantly more cost-effective. Businesses pay a predictable subscription fee based on their needs, avoiding the higher costs associated with professional services. This affordability allows small businesses to allocate financial resources more strategically.

 Time-saving efficiency

Automating payroll tasks saves valuable time for business owners and HR personnel. Instead of spending hours on manual calculations and paperwork, they can focus on core business activities, such as growing the business, improving customer service, or developing new products and services.

Improved employee satisfaction

Payroll software often includes self-service portals where employees can access their pay stubs, tax forms, and benefits information online. This transparency and accessibility contribute to improved employee satisfaction and engagement.

Considerations for small businesses doing their own payroll

Deciding whether to manage payroll in-house with software or hire an accountant is a significant choice for small businesses.

Here are key considerations to help navigate this decision-making process: 

Understanding the complexity

Payroll involves more than just issuing pay slips. It encompasses calculating taxes, deductions, and benefits and ensuring compliance with ever-changing regulations. While payroll software simplifies these tasks, it still requires a basic understanding of payroll principles and attention to detail. Assessing your comfort level with these responsibilities is crucial in determining whether to manage payroll internally or seek professional help.

Assessing business needs and resources

Consider the size of your business, the number of employees, and your budget. Payroll software offers scalability and affordability, making it ideal for small businesses with straightforward payroll needs and limited resources. On the other hand, if your business has complex payroll requirements, multiple benefits packages, or operates in multiple states, an accountant's expertise in navigating these complexities may be invaluable.

Cost vs. value

Evaluate the costs associated with each option. Payroll software typically involves a monthly subscription fee, which may be more cost-effective than the recurring expenses of hiring an accountant. However, consider the value that an accountant brings beyond payroll, such as financial advice, tax planning, and strategic guidance. Assess whether these additional services align with your business goals and justify the higher cost.

Time and efficiency

Managing payroll internally with software can save time compared to manual processes or outsourcing to an accountant. Consider how much time you and your team can dedicate to payroll tasks versus focusing on core business operations. Efficiency gains from automation and streamlined processes can contribute significantly to overall business productivity.

Risk management

Compliance errors in payroll can result in penalties and damage to your business's reputation. Payroll software helps mitigate these risks by automating calculations and ensuring regulatory compliance. Assess your risk tolerance and ability to stay updated on changing regulations when deciding whether to handle payroll internally.

 Long-term scalability

As your business grows, so do your payroll needs. Payroll software offers scalability to accommodate increasing employee numbers and expanding business operations. Evaluate whether the software can adapt to your future needs or if hiring an accountant provides more flexibility in managing growth.

How to do payroll yourself with the help of BrightHR

The decision to manage payroll internally with software or hire an accountant depends on understanding your business's specific needs, resources, and growth trajectory. By weighing these considerations carefully, small businesses can make an informed choice that supports financial efficiency, compliance, and overall business success.

While accountants offer strategic financial advice beyond payroll, BrightHR Payroll provides all the tools and support needed specifically for efficient payroll processing, so that businesses can handle payroll independently, even without extensive accounting knowledge. Saving time, resources and money, without compromising on accuracy or efficiency.