Payroll for retail – Detailed introduction to payroll solutions for UK retail businesses

Updated on 7 August 2023

Do you own or work for a UK retail business? If so, it’s critical that you maintain control of your retail payroll.

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Payroll can be a daunting task for any business, but it’s especially important for those in the retail sector. Retail businesses provide some five million jobs for employees in the UK, meaning that five million people rely on accurate payroll for their wages. As a business owner, it’s crucial to have a handle on your payroll in order to keep your business running smoothly.

Video: Payroll outsourcing explained

There are many payroll solutions available for UK retail businesses, and it can be difficult to decide which one is right for you. This guide will provide a detailed overview of payroll solutions for UK retail businesses, so that you can make an informed decision about which solution is best for your business.

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In this guide, we’ll cover:

  • The different types of payroll solutions available for UK retail businesses
  • The benefits and drawbacks of each type of solution
  • The steps you need to take to set up payroll for your retail business

By the end of this guide, you’ll have a thorough understanding of the payroll options available to you, and you’ll be able to make an informed decision about which solution is best for your business. So let’s get started!

What unique challenges do UK retail businesses face with their payroll?

When it comes to payroll, UK retail businesses face a unique set of challenges. One of the biggest challenges is that pay rates can vary greatly, depending on the time of year and on the employees’ shifts.

For example, retailers need to be aware of overtime payments that may be due during peak shopping seasons. In addition, turnover is high in the retail industry (often 60% staff turnover per year), which means that payroll is constantly changing as employees come and go.

This makes it all the more important to have a flexible and easily updated HR & Payroll system in place. By being aware of these challenges and taking steps to address them, retail business managers can ensure that their payroll runs smoothly and efficiently.

Payroll solutions for retail companies – Is it better to outsource or to undertake your payroll in-house?

You have a decision to make: Should you run your payroll in-house, or outsource it?

Running the payroll process in-house means having someone on staff who is responsible for adding personal details of all employees to payroll (and removing them upon resignation, retirement or dismissal), updating any changes to rates of pay, and ensuring that wage payments reach all employees on a contractually agreed date.

This employee will also need to take care of all tax implications for staff, including withholding PAYE tax and National Insurance contributions from a salary, making these payments to HMRC, and promptly filling any reports with the tax office.

Payroll outsourcing involves paying someone else to do these things for you. An outsourced payroll service will simply require your staff’s information and ensure that they are paid on time every week, fortnight, or month. The outsourced payroll firm will also handle all tax-related duties, including interacting with HMRC.

So, which is best? This depends on what you value and what you are looking for from your payroll service. Consider the following factors:

  • In-house payroll requires a dedicated staff member, but gives you more control over the process.
  • Outsourcing your payroll means paying someone else to handle the responsibilities, but can take a load off of your plate.
  • Tax implications must be taken into consideration no matter which route you choose.
  • Ultimately, the decision comes down to what you value and what you need from a payroll service.

Considerations for in-house payroll for retail

  1. In-house payroll can be a full-time role in itself, especially if you have high staff churn.
  2. Any mistakes will be your responsibility to correct, but you’ll have the power to do so instantly.
  3. A basic payroll that includes one site and staffing team should be simple enough, but additional businesses – especially overseas – can start to grow complicated.
  4. You can maintain complete control over employee personal data.
  5. You will be responsible for all legal compliance surrounding payroll, most notably tax considerations.
  6. In-house payroll gives you the power to make corrections instantly and maintain complete control over employee personal data.

Considerations for outsourced payroll for retail

  1. You will need to pay for the services of a third-party payroll company, usually on a contract basis.
  2. This will free up your time to focus on your retail business.
  3. However, mistakes can still happen and you will need to notify your provider of these errors and wait for them to be corrected.
  4. Any complex payroll needs you may require will be handled with the same efficiency as you’d expect.
  5. You will need to furnish the payroll provider with employee personal data.
  6. Your payroll provider will take full responsibility for withholding employee tax contributions and filing HMRC reports.

When it comes to payroll services and solutions, outsourcing is often best for large-scale employers with multiple retail sites or businesses to contend with and a substantial staff turnover. However, a smaller retailer with limited requirements may be perfectly fine managing payroll in-house using specialist software.

Ultimately, the decision of whether to outsource or not will come down to the specific needs and resources of the retail business in question.

Retail payroll software

Payroll software is a great way to keep your employees’ details in a digital format, and the software will crunch numbers and arrange bank transfers for you. This is much easier than relying on an Excel spreadsheet and a manual payment run! Consider investing in specialist software to make your retail payroll process smoother and more efficient.

You’ll need to pick a payroll software that fits your needs if you’re going to use it. Key elements of this include:

  • When looking for payroll software, it is important to consider whether the program is endorsed by HMRC.
  • Licenses and updates for the software should be considered, as well as the number of employees that can be added to the payroll.
  • The software’s usability and intuitiveness should also be considered, along with customer service and support options.
  • Other important factors to consider include what additional services are provided by the software and whether the software is cloud-based or locked onto one computer.
  • If the software is cloud-based, employees should be able to access payslips and other documents easily. This will save the business time and money.
What about a hybrid approach?
Of course, you may also pay for payroll software and have an outsourced payroll firm manage your payroll through the program, although some payroll firms may prefer to use their own resources.

Employing a permanent payroll administrator within your retail business

For small businesses, it’s often more cost-effective to run payroll themselves. This involves purchasing software and/or hiring an administrator with the necessary skills to manage the process. However, for businesses with a high turnover of staff or complex payment patterns, it may be more beneficial to hire a payroll administrator.

When it comes to finding the right person to manage your payroll, there are a few key things to look for. First of all, you need somebody with experience – ideally, within the retail sector. That way they’ll be familiar with the specific payment patterns and staff turnover rates that are common in your industry. They’ll also have a good understanding of the tax laws that apply to your business, which will help avoid any potential problems down the line.

Another key advantage of hiring a payroll clerk is that they’re dedicated to this one task. In a busy retail environment, it’s easy for things to slip through the cracks. Having somebody whose sole responsibility is to keep on top of the payroll will help ensure that everything is paid on time and correctly.

So if you’re looking to streamline your payroll processing and avoid any potential headaches, hiring a experienced payroll clerk is the way to go.

However, you will also need to consider other factors when hiring for this position such as how many hours they work per week, benefits packages (paid holiday leave etc.), and the cost of hardware or software associated with the role.

You want to make sure that you are getting the best value for your money, so it is important to compare the pros and cons of both options before making a decision. If you’re still not sure, there are plenty of payroll bureaus who offer free consultations to help you make the best choice for your business. In the end, you want to be confident that you have made the right decision for your store and your team.

Compliance issues and important points for retail payroll administration

During this guide, we’ve mentioned compliance and legal issues a few of times, so let’s summarise some of the areas where compliance issues can occur for a retail payroll.

  • Ensuring all employees are legally able to work in the UK
  • Paying the national living wage or higher
  • Making additional payments related to overtime or working holidays
  • Meeting payment dates specified in employee contracts
  • Keeping accurate and up-to-date employee records
  • Withholding PAYE income tax and National Insurance contributions
  • Providing employees with payslips and a P60 tax summary
  • Being transparent with payroll if HMRC or another governing body requests to review it.
Don’t forget Auto Enrolment
Auto-enrolment into workplace pensions is something that all employers should be aware of. Unless the employee chooses to opt out, 5% of all earnings must be placed in a pension. This will be matched by a 3% contribution from you, the employer. For more information about auto-enrolment into pensions, visit the official website of The Pensions Regulator.

Retail payroll processing costs compared

In this article, we’ve gone through several different strategies that a company may take to handle payroll in the retail sector. However, one last element will have a significant influence on the ultimate decision – the price.

  • A payroll clerk can be hired at a cost of around £22,000 annually, plus benefits and any other associated costs.
  • Alternatively, an outsourced payroll provider can be used for an average cost of £25 per month.
  • Finally, payroll software can be used for around £10 to £15 per month, though the time it takes to manage the payroll should also be considered.

Ultimately, the decision of which route to take will come down to cost and efficiency.

When it comes to calculating how much a retail business will spend on payroll, there are a few key factors that need to be taken into account.

  • The first consideration is the number of employees on the payroll. This cost is usually quoted per head, and the more employees you have, the lower the cost per person.
  • Another important factor is the complexity of your payroll. This can include things like overseas payments or constant changes to employee data, which may incur additional charges.
  • Finally, you will also need to consider any additional services that might be required. Some payroll providers and software packages offer HR management as an add-on service, but this will come at an extra cost.

By taking all of these factors into account, you will be able to get a more accurate idea of how much you’ll need to budget for payroll.

Final words

If you’re a manager in the retail industry, you know that payroll can be a demanding task. Staff turnover is higher than in many other sectors, so it’s important to consider outsourcing your payroll if you’re not able to handle it in-house.

There are many software programs available that can assist with retail payroll, but it’s important to choose one that is user-friendly and flexible to accommodate the changing needs of your business.

Outsourcing payroll can be a costly endeavor, but it may save you countless hours of time in the long run. If you decide to handle payroll in-house, make sure you have a software program that can keep up with the demands of your business.

Reviewed by , Managing Director

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