When businesses review payroll, the conversation usually starts with cost and control.
Should payroll be run in-house, or outsourced to a provider?

In reality, both models can work — and both can fail — if the fundamentals aren’t right.

Doing payroll properly (the basics still matter)

Whether payroll is run internally or outsourced, there are certain non-negotiables that must be right:

  • Accurate and on-time payroll processing

  • Correct PAYE, National Insurance and statutory deductions

  • National Minimum Wage compliance, including salaried staff and deductions

  • Holiday pay calculated correctly, including variable pay and irregular hours where applicable

  • Expenses treated correctly for tax and NIC purposes

  • RTI submissions to HMRC completed accurately and on time

  • Pension auto-enrolment set up correctly and contributions submitted

  • Clear, accurate payslips and audit-ready records

  • Secure handling of employee data

  • A reliable year-end process with no surprises

This is the baseline. It’s what any competent payroll setup should deliver.

Where problems really arise

Most payroll issues don’t show up on payslips.
They show up later — in the accounts, HMRC balances, and cashflow.

Common issues we see include:

  • PAYE, pension or CIS liabilities not reconciling to HMRC or providers

  • Historic payroll errors sitting quietly in the balance sheet

  • NMW or holiday pay issues only surfacing during HMRC reviews

  • Expenses and benefits coded inconsistently

  • Business owners unsure what they actually owe — or why

  • Payroll “working” operationally but creating financial risk in the background

This happens just as often with outsourced payroll as it does in-house.

In-house vs outsourced: the real trade-off

In-house payroll

  • Greater day-to-day control and flexibility

  • Higher cost once wages, cover, software and risk are considered

  • Heavy reliance on key individuals

  • Full responsibility for legislation, accuracy and continuity

Outsourced payroll

  • Lower headline cost and access to specialist processing

  • Quality varies significantly between providers

  • Still requires internal ownership and oversight

  • Often stops at processing, not financial reconciliation

The right choice depends on the business — but neither removes responsibility.

Where Harbour adds value

At Harbour, we don’t just “run payroll”.

We make sure:

  • Payroll is processed accurately and compliantly

  • NMW, holiday pay and expenses are treated correctly

  • HMRC, pension and payroll liabilities are set up properly in the accounts

  • Figures reconcile — not just on paper, but in reality

  • Systems talk to each other cleanly (payroll, accounts, HMRC)

  • Business owners actually understand what’s going on — in plain English

Whether payroll is outsourced to us, already outsourced elsewhere, or kept in-house, our role is to make sure the structure, numbers and risk are under control.

Payroll done on time is expected.
Payroll done properly protects the business.

If you’re unsure whether your current setup is genuinely working, our finance and compliance health check is designed to uncover issues early — before they become expensive.

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