Payroll services and Freeagent/Xero

[JDX_John]

We started a B&M business 2-3 years ago initially with us as directors and one employee, with our accountant doing all payroll stuff as well as the core accountancy (we do payments, they generate all the payslips and pension stuff). As a very small business they recommended FreeAgent which seemed good - I use it for my consultancy business so was familiar with it.

We've slowly grown and now have half a dozen people on pay-roll plus a few 'freelance' type people. The accountant has continued to handle things, charging us an additional fee per-employee each month which all seems reasonable, but has now told us they wish to a)switch to Xero b)increase our fees quite substantially - I think essentially moving us from "Ltd business package with a couple of employees" to "small business package".

No particular problem with that and from what I hear Xero is the better tool in our scenario, but it reminded us we had been considering changing how we do payroll anyway. Our accountant offers it as a separate service but my understanding is we could use a 3rd party for this who specialise in that side of things. But I don't know of any, or whether it realistically makes sense to use a 3rd party in a business our size. So I'd be interested to hear how other people with a similar size business handle things, and any lessons you've learned so we can avoid obvious mistakes.

 

[MyAccountantOnline]

I dont use Xero but I'm fairy certain Xero will handle payroll. If it will it may be something you could run in house?

 

[Newchodge]

We started a B&M business 2-3 years ago initially with us as directors and one employee, with our accountant doing all payroll stuff as well as the core accountancy (we do payments, they generate all the payslips and pension stuff). As a very small business they recommended FreeAgent which seemed good - I use it for my consultancy business so was familiar with it.

We've slowly grown and now have half a dozen people on pay-roll plus a few 'freelance' type people. The accountant has continued to handle things, charging us an additional fee per-employee each month which all seems reasonable, but has now told us they wish to a)switch to Xero b)increase our fees quite substantially - I think essentially moving us from "Ltd business package with a couple of employees" to "small business package".

No particular problem with that and from what I hear Xero is the better tool in our scenario, but it reminded us we had been considering changing how we do payroll anyway. Our accountant offers it as a separate service but my understanding is we could use a 3rd party for this who specialise in that side of things. But I don't know of any, or whether it realistically makes sense to use a 3rd party in a business our size. So I'd be interested to hear how other people with a similar size business handle things, and any lessons you've learned so we can avoid obvious mistakes.

I run a payroll bureau, using payroll software, rather than something added to an accounts package. There should be no problem in separating payroll from the other accounts work. Some accountants do payroll for nothing, others charge a large amount because they are not really interested in doing the work.

In my own business I provide payroll and employment law support, as they seem more linked than payroll and accounts.

 

[JDX_John]

I dont use Xero but I'm fairy certain Xero will handle payroll. If it will it may be something you could run in house?

I think they want to move us to Xero because it does payroll better than FreeAgent (which lets you do payslips but I don't think really has much payroll functionality). Which sounds like even if we used 3rd party, switching would be preferable so everyone is using the same too?

We're talked about doing it ourselves but like many small businesses, are pretty overloaded as it is without bringing in more jobs

 

[motty]

I am not an accountant or even close, I decided not to use accountants due to previous issues and have found that FreeAgent is fantastic and completes all tasks effortlessly and runs payroll and will even complete the end of year submissions which was the only bit I was concerned about.

 

[Steve Tanner]

As an accounting firm that include payroll as part of our service (and thus perhaps slightly biased), my view would be to keep your payroll service with the same accountant that is providing everything else. In my experience, it's easier to keep it within the same software package as that way, when payroll is submitted each month, the necessary accounting journals will be automatically posted in your accounting system. If you instead use a separate payroll provider, they'll then need to provide your accountant with the necessary postings to then put into your accounting software. Not a huge issue but an extra step you could otherwise remove.

 

[Bilal Attique]

You can absolutely move to a third party as many medium and large businesses do however I agree if the costs of your accountant are similar to the third party then I would stick with the accountants.
I am an accountant and we offer the payroll as a third-party service to our clients as well as offering as part of the package from Xero which the clients can run themselves so all the options are available.