Payroll providers for small businesses in the UK come in three kinds: software you run yourself, an accountant or payroll bureau that runs it for you, and managed payroll, where a specialist runs your payroll in software you can also see. The right one depends on how many people you pay, how often their pay changes, and how much time and knowledge you have in-house. Whichever you pick, ask the same questions: is the software HMRC-recognised, how are mistakes corrected, and what data do you get back if you leave?
Most small businesses do not choose their payroll setup. They inherit it. Payroll came bundled with the accountant when there were three people, and nobody revisited it. Then the fee jumps, from a few pounds a month to tens of pounds. Every extra email is billed. A correction gets made on the wrong person’s payslip. Turnaround slows to days. Or payroll lives with one person who knows how it all works, and takes the laptop on holiday.
If that sounds familiar, this guide walks through the options and what to ask.
The three options
1. Do it yourself with payroll software
You buy payroll software and someone in your team runs each pay run: entering changes, checking the figures, sending the Full Payment Submission (FPS) to HMRC, paying staff and the pension scheme.
HMRC keeps a list of recognised payroll software, including free options for employers with fewer than 10 employees. HMRC does not recommend one product over another, so the list tells you what can report to HMRC, not what suits you.
- Money: the lowest outlay. A subscription, or nothing at all for some free tools.
- Time: the highest. Someone in your team does every run, keeps up with rule changes and fixes mistakes.
- Suits: simple payrolls with steady pay, and a person who knows payroll and has time for it.
2. Your accountant or a payroll bureau
You send changes by email or spreadsheet; they run payroll and send back payslips and reports.
- Money: usually a monthly fee, often per employee, with extras for starters, leavers, corrections or year-end.
- Time: low for you while things are simple. Higher than it looks once you count chasing, checking and back-and-forth.
- Suits: small, stable teams where pay rarely changes.
3. Managed payroll
A payroll specialist runs each pay run for you, from data held in software your team can also use. You approve before anything is paid.
- Money: more than software alone, because you are paying for expert time.
- Time: low. Your team keeps the inputs up to date and approves.
- Suits: growing teams with variable pay, several sites or no payroll expert in-house.
Accountant payroll vs payroll provider
Payroll bundled with your accountant is not wrong. For a handful of salaried staff it can be the simplest answer. The problem is that payroll is rarely an accountant’s main service, so it gets fitted around year-end accounts and tax returns. Changes go by email, the records live in their system rather than yours, and every question is a request in a queue.
A dedicated payroll provider, whether software or managed, does payroll as its main job. You should expect clear cut-offs, a defined way to approve the payroll, and records you can see without asking.
Payroll software vs managed payroll
The real question is who does the work and who holds the knowledge.
| Payroll software | Managed payroll | |
|---|---|---|
| Who runs each pay run | Your team | A payroll specialist |
| Who keeps up with rule changes | Your team, helped by the software | The specialist |
| Who approves | Your team | Your team |
| Who can see the records | Your team | Your team and the specialist |
| Risk when one person is away | High if one person runs it | Lower: the specialist runs it |
The “one person holds all the knowledge” problem is the biggest hidden risk in small business payroll. If your payroll depends on someone being at their desk on the 25th, plan for the month they are not. Our guide on when payroll outsourcing is right for your business covers the wider signs.
Signs you’ve outgrown your accountant’s payroll
- The fee has risen sharply, or you are billed per email or per change
- Mistakes keep happening, or a fix lands on the wrong person
- You wait days for a draft payroll or an answer
- Overtime, shift premiums or commission are typed in by hand each month
- You have no clear cut-off, so late changes crowd payday
- Employees ask you payroll questions you cannot answer without emailing someone
- You cannot see your own payroll records without asking for them
Two or three of these is a sign to look around. Several means it is costing you more than the fee.
Questions to ask any payroll provider
| Question | Why it matters |
|---|---|
| Is the software on HMRC’s list of recognised payroll software? | Unless exempt, you must report PAYE online through software that can do it. |
| How are pensions handled: enrolment, contributions, files to the scheme? | Auto-enrolment errors are costly to put right. |
| How are statutory payments calculated and reclaimed? | SSP, SMP and the rest need the right records and reporting. |
| What is the corrections process, and is there a charge? | You will need it. Ask how a mistake gets fixed and how fast. |
| What are the support hours, and who answers? | A payroll expert, or a general helpdesk? |
| Does it produce a bank payment file for my bank? | Paying people one by one does not scale. |
| What are the cut-offs for changes each month? | Clear cut-offs keep payday calm. |
| Who approves the payroll before it is paid? | You should have the final say. |
| What data do I get back if I leave, and in what format? | You will need year-to-date figures, payroll IDs and history to move. |
The last question matters more than it seems. If you ever need to move, you will need a full year-to-date report for every employee and your submission history. Our guide to switching payroll providers mid-year lists what to ask for. And if paying staff is the sore point, read how Bacs payroll and bank files work.
A worked example: one payroll, three ways
A business with 25 employees, monthly pay, with overtime for about 10 of them.
- Software: someone collects overtime from managers, enters it, checks the draft, sends the FPS, uploads the bank file and pays HMRC and the pension scheme. If they are off sick in the payroll week, nobody else knows the steps.
- Accountant: the same overtime goes in a spreadsheet by email. The draft comes back, someone spots an error, it goes back again. Each round adds a day and may add a fee.
- Managed: overtime is approved in the system by the cut-off. The specialist prepares the payroll, your finance lead reviews and approves, and the bank file is ready to upload.
None is wrong. The question is which one fails least badly in your worst month.
How Givver fits
Givver offers both. Payroll software for SMEs is HMRC-recognised and covers RTI submissions, payslips sent automatically, statutory payments, pension management and bank payment files. With managed payroll, a named CIPP-qualified Givver payroll specialist runs each pay run from the data in Givver, and your team approves. Support comes from CIPP-qualified payroll experts by Slack, Microsoft Teams, WhatsApp and email, Monday to Friday, 7am to 8pm UK time.
FAQs
What should a small business look for in a payroll provider?
HMRC-recognised software, clear pension and statutory pay handling, a defined corrections process, support from people who know payroll, bank payment files, clear cut-offs, and your data back if you leave.
Is it cheaper to do payroll yourself?
In money, usually. In time, often not. Count the hours spent running, checking and fixing payroll, and the risk when the person who does it is away.
What’s the difference between payroll software and managed payroll?
With software, your team runs each pay run. With managed payroll, a specialist runs it and your team approves.
When have you outgrown your accountant’s payroll?
When fees rise faster than your headcount, mistakes repeat, turnaround slows, or only one person understands how your payroll works.
Choose for your worst month
Most payroll setups work in a quiet month. Pick the one that still works when someone is on holiday, overtime is late and a starter arrives the day before payday. Talk to sales about which option fits your team.