Stake your claim in the expanding payroll market with your own payroll service company.
HRM technology continues to evolve the way we work and live. No matter the sector, businesses are looking for the most cutting-edge solutions. Without a doubt, one of the most important technologies is payroll. A payroll suite offers more than legal adherence to your country’s employment and wage laws. It’s a powerful tool for storing and analysing data on your employees and planning for the future.
The market continues to grow, after a CAGR growth (Compound Annual Growth Rate) of around 6% between 2014-2019. Demands for time-saving, cost-effective measures must be met. The scope for innovation pushes providers to offer new and scalable payroll services. If you’re looking for a business venture, now is the time to tap into this exciting, lucrative market with the help of Invatechs.
In this article, we’re going to give you a full guide on how to start your own payroll service company. It’ll cover the basics of software and setting up your team. Practical key steps, necessary legal compliance and FAQs. We’ll also introduce you to Invatechs’ own bespoke payroll services. Whether you’re a start-up or want to learn more about payroll, you’re in the right place.
WHAT DO PAYROLL COMPANIES DO? THE BASICS
Whether you’re an SME business or a multi-national corporation, everyone needs payroll. Payroll service companies facilitate automated payment processes with their products and services. They do more than this though. They ensure the software is automatically updated, so it is in keeping with any legal changes or tax payments.
They come in the form of limited and umbrella companies. Umbrella companies operate as employers for contractors, generally on fixed-term contracts. They process contractors’ timesheets and issue invoices. They deposit wages through PAYE.
A limited company is a private company. They take on full responsibility for the company they process payroll for. That means they are liable for their debts and administrative duties. However, limited companies have access to, and full control over finances. Check out this article if you want more details.
Some payroll services offer HR support services. Payroll service companies work with specific devices and technologies. These can vary from apps to online portals and finger scanners to clock in-and-out. Above all, they keep a log of employees’ working hours and make it easier for a company’s HR team and management. Furthermore, business leaders look to specialist payroll providers for the best legal advice. This is what payroll service companies providers do in a nutshell.
We touched on market capacity in the introduction. Whilst the market is competitive, particular trends in fintech will help to establish the leading payroll service companies from the weak. It’s up to you to decide how you will ride these trends to success.
AI and Machine Learning will accrue more advanced data. With the growth of remote working, mobile solutions are crucial. Time zones and geopolitics require global payroll to constantly adapt. Identifying and using these growing trends is critical if you want to stand out in the market.
Invablog is an invaluable source for staying up to date with trends. Whether you want to learn about top trends for the future of payroll or the cost of payroll. You’ll find plenty of original ideas and concepts.
WHAT YOU SHOULD KNOW BEFORE YOU GET STARTED
Payroll is a complex business. From the legal know-how to assembling your team. In the initial stages of starting your company, thorough research is required. Whether it’s a broader knowledge about fintech or GDRP. Let’s break some of these down quickly.
Operating Staff
In your team, you’ll need a variety of assistants, specialists, technicians and managers. This is to cover the running and operations of the payroll itself. These team members will be instrumental in setting up the system and teaching it to future staff. However, don’t forget about your extended marketing team and legal support.
Payroll technicians and assistants are usually at entry-level. They are responsible for HR, information and records confidentiality. You’ll want to look for people with HR and payroll experience.
Payroll specialists should be knowledgeable about payroll systems and fintech generally. They oversee reporting and analytics. They play a crucial role in daily operations and system management. More than that, they invest time in researching new solutions and trends for your payroll. Someone with computer science skills and literacy is essential. Still, look deeper for someone with a keen interest in fintech and global payroll development! They’ll be a valuable asset.
Payroll administrators oversee the coordination of your business. This means a variety of tasks, such as managing your team’s workloads and monthly calendars. Leading daily activities and goals. Ensuring employees are paid on time. Administrators will also play a role in auditing and payroll reports. Establishing solutions and ideas for the future.
It’s important to remember you can tie everyone’s responsibilities together with a great CRM. Check out our blog on CRMs to find out more.
Software Requirements
The capacity of your software capabilities will be influenced by your budget. However, there are some basics every company needs.
By now, you probably know that cloud-based platforms are a must. It’s the easiest solution for giving everyone from staff to employees to clients access to information. It can connect payroll from Dubai to London.
In addition to this, you’ll want software with integrated accounting and customisation features. Reporting features and automated calculation systems. Efficient software with high levels of accuracy and zero errors. The difficult part will be taking everything your software can do and streamlining it effectively. Don’t worry. We’ll touch on this in some more detail shortly.
Legal Compliance
Different countries will require particular legal prerequisites when you start your business. Let’s use the UK as an example here.
PAYE (pay as you earn) allows HMRC to collect income tax and National Insurance from employees. For everyone, from your own staff to your clients, PAYE is needed to get the ball rolling. Registering for VAT, abiding by MTD (Making Tax Digital) is also a necessity for all UK payroll.
If you’re setting up in the UK, you have to know the ins-and-outs of HMRC and GDPR. Both of these bind your business to data protection and documentation processing. Such as processing employees’ P45s. Thankfully, gov.uk has great resources.
STEPS TO GET YOU STARTED
We'll use Invatechs’ own software development as a model.
Step 1: Find Your Angle
As we’ve highlighted, the market is already competitive. Take a look at these major companies. At Invatechs, we start by combining market research with competitor analysis. What can your company offer that the market doesn’t have? How scalable is the software you’re selling? This is your opportunity to discover what is unique about your company.
Step 2: Determine Your Business Structure
You’ll need to decide where you’ll be running your business from. Whether it is predominantly remote or if you need an office space. You’ll need to decide on your business type. Whether you’re a limited liability company or umbrella company.
Step 3: Software Construction & Team Processing
Who is building the products you’re selling? You might have recruited or collaborated to build an in-house team. Alternatively, you might look for an external company to build the software that you’re selling. Whatever decision you make, your processing team and/or vendor are pivotal to your longevity.
Step 4: Tech Stack
In building your software, you’ll need software licensing and a tech stack. If you need a consultation and help deciding on your tech stack, Invatechs is here to help. You might already have a knowledgeable team of experts on board. If you’re a novice, knowing where to start can be difficult. Take a look at one of our client projects if you need some inspiration. Invatechs even offers payroll suits with perpetual license fees. No matter what you go with, the backend is foundational.
Step 5: Prototyping & Testing
Now you’re in the nuts and bolts of the building process. You’re in the midst of creating your payroll apps. Testing the scalability of your tools. The clock-in-and-out features. Time management. Making sure your products fit the requirements for yourself and your clients. Tax calculations. Everything you expect your payroll product to do.
Prototyping and testing are crucial. You’re moving vast amounts of companies and employees’ wages and resources. The testing phase has to be rigorous and thorough. You’ll need people behind you with years of experience. Whether it’s coming from your team or the help of Invatechs. Product testing and prototyping is essential for safety.
Step 6: Sales & Marketing
With your product and target audience acquired, now it’s time to shift your product. You need a platform to ledger sales, leads and quotes.
Your CRM will be a powerful force in tying these together. Putting your social media marketing and contact portals in one place. After all, a positive customer experience is what will keep clients coming back.
Step 7: Launch & Support
By now, you should have a product you’re proud of and a market to sell to. The initial stages of release are a tense time. You need confidence in your team and the software you’re working with. Launching is a big step, but one that needs follow-through. Whether it’s maintenance support or software updates.
Hopefully, you can see from these steps you need a confident team and vendor behind you. A vision isn’t enough. It’s a big project. So, let’s tackle some hurdles you might face.
POSSIBLE ISSUES & HOW TO OVERCOME THEM
Staffing Models & Distribution
Ensure your payroll configurations can cater to different staffing models. You might sell to clients with staff that employ freelancers, part-timers and full-timers. The system needs to work for clients overseeing various branches, divisions and locations. In the software development stage, ensure your system is built with flexible and dynamic configurations that can withstand changes and challenges.
Bespoke Payroll Development vs Standard Products
Some businesses will need bespoke suits for their operations. If you sell a standard product – even a very good one – it might not be adaptable for certain markets. This is another thing to determine early in your company’s scope. Bespoke payrolls suits generate a huge amount of capital in revenue, particularly if you sell to a big company. Check out Invatechs’ own bespoke payroll suits for more information.
Legal Knowledge
If your start-up team is small, it can be difficult to form a legal infrastructure for your business. Depending on a revolving door of outsourced legal advice may not be consistent down the line. For example, UK HMRC regulations differ to IRS regulations in the USA. It’s best to get all that legal advice in one place. That’s why all of Invatechs software and solutions are built with legal compliance. Bespoke to different locations and staffing models.
Accuracy
Above all, accuracy and data will be the driving force of your software’s success. This is why your technology and clocking in-and-out systems need to be efficient. It’s important your clients’ employees are confident using your system. Here, the cloud can save the day again. All timestamps, audits and reports can be ledgered in the same place. This means there’s transparency across the supply chain.
QUICK COST ANALYSIS
Costs will vary depending on your business structure and scale. Large scale, global companies will need a bigger capital requirement. A starting region of between 100k-150k. From training to licensing fees. Office renting and insurance. Navigating your start-up cost is a massive undertaking.
Of course, the scalability of your software and devices can be a money-saver and maker. For example, with our Invatechs payroll suite, managers can process x3 more customers with the power of automation. Like your team and vendor, your software isn't something you can afford to do on the cheap. They’ll be a driving force of your growth and revenue.
FAQs ON PAYROLL PROCESSING
What’s the difference between Bi-Weekly and Semi-Monthly? Wages will be deposited fortnightly with a bi-weekly system. This process costs less since fewer fund-transfers take place. Semi-monthly is a more flexible way of making 24 payments over a year.
What is the Onboarding Process? This is the process of integrating employees into a company. Your implementation specialist or manager will install your tax and wage information on to their system.
What additional payments should be in my payroll? Depending on the location: maternity cover, health insurance and benefits might be necessary.
What are some of the most common mistakes with payroll? We’ve got a whole blog dedicated to this topic!
IN CONCLUSION
We hope you’re leaving this article with the knowledge to take your first steps. As you can see, starting a payroll service company is a huge undertaking. In such a competitive market, your operations need to be as fast and efficient as possible. You need a strong team and infrastructure behind you. More than that, you need unbeatable software that can survive and thrive.
At Invatechs, we partner with product companies to develop and sell the best fintech solutions on the market. We’re data and goals driven. Taking clients initial concepts and seeing them through to fruition. Our payroll suite has everything you're looking for. Using our powerful suite, your business's payroll can be set up in a week.
Our expertise doesn’t stop there though. We build CRM systems and open banking app. Our team is able to pool together our fintech capabilities. Providing our clients with the highest standards of products. Whether you’re looking for advice or want us to build your payroll software. How will Invatechs launch your next business venture? Contact us today and start your next business chapter.