One of the key things that small and medium sized businesses (SMBs) ought to get right is payroll. Not only is it a legal requirement to maintain the relevant documents and pay the correct amount of tax, getting ready helps assuring your employees that the business is trustworthy.
Making mistakes when running payroll can be costly not solely to your employees, but to your business too, both financially and reputationally. Such mistakes include overpaying or underpaying tax, paying employees late or incorrectly and making incorrect pension contributions. You risk incurring penalties or interest charges from HMRC and the morale and trust of your employees.
Understand your responsibilities
When deciding to take on staff members and becoming an employer, you should get employers’ liability insurance, as well as register as an employer with HM Revenue and Customs (HMRC) to receive a login for PAYE Online.
You will be required to compensate your employees through PAYE if they earn at least £120 per week.
You will also need to use a compliant payroll software if you are not outsourcing payroll services.The software should be able to:
- Record employees’ details
- Work out pay and deductions
- Report the payroll information to HMRC
- Calculate tax owed to HMRC.
As outlined by law, complete records concerning payroll ought to be maintained, including how much you pay your employees and any deductions made, employee absences and payments to HMRC.
Choose a system that’s right for your business
Whether you choose to process payroll yourself, use software or outsource to a third-party bureau or accountant; it’s key that your chosen payroll processing method is the right one for your business and employees.
Keep your payroll policies simple
Try to keep your company payroll policies simple and easy to understand. Not only will your employees appreciate the clarity, but it will minimize the volume of administrative tasks that form part of your payroll process.
Create a payroll calendar
Having a payroll calendar can help in ensuring you stay on track when processing payroll. A calendar can help you keep on top of your pay periods, cut-off dates for commission payments, expenses and mileage claims, and help you to manage the tasks that need to be done each month.
With a clear picture of what needs to be done, and by when, you can keep track of every stage of your payroll process. This will keep your entire payroll department on the same page and aware of what has been completed or is yet to be done to process this month’s payroll.
If you require support with payroll, please contact us