Getting your payroll done is one of the most important tasks that you have as an employer – your staff and team are counting on you to get it done on time, and correctly – because their very livelihoods and their ability to pay their own bills depends on being paid on time.
Whether you have a small team of just a few, or a full range of employees, the way you handle your payroll, at its core, doesn’t change – you have to input certain set data, add in information about the employees, and generate reports as you finish.
HMRC use wage information and employment data to determine benefits, taxable amounts, and other important legal activities, so you can imagine that they take a dim view of problem payrolls or consistent late activities – the penalties for late submissions start at £100 (for between 1 to 9 employees) and increase from there.
What Do You Need to Run Your Payroll?
When you’re setting up your payroll, there are certain standards and legal obligations that you’re required to abide by. Making Tax Digital (MTD) is a program being rolled out by HMRC, that requires digitisation of reports and records, it’s being introduced in stages, and most payroll and accounting software is now compatible with the requirements – before you set up your payroll, you’ll want to make sure your software is suitable, and the reports are compatible with your accounting software – otherwise you could end up having to run the reports twice!
Every employee in your company (yourself included) needs to have a payroll entry with a record of pay.
You need to include:
- Gross pay
- National Insurance (NI) contributions
- Income tax
- Other deductions
- Net pay
- How the net pay is renumerated
Payroll is generally split into four sections – Gross pay, Net Salary, Ad-hoc payments, and Benefits. It’s important to record these amounts individually, as there are different requirements for reporting and reasons for requiring the information.
What are the Biggest Problems When Running a Payroll?
The most common challenges, which can negatively impact a payroll operation are:
- Human error
- Non-compliance
- Security
- Time and Attendance
- Employee Actions
Running your own payroll can be tricky, especially if you’re busy with other business activities – but it cannot be delayed or put off, as we mentioned – your staff are counting on you to pay them on time, and correctly.
If you’re not used to running your own payroll or aren’t confident in your experience with your chosen software, it’s a very good idea to seek external advice from experts who know the ins and outs of the system and can advise you on the best methods to successfully complete each payroll.
What are Your Payroll Responsibilities?
You have a responsibility to your staff and employees to ensure they are being paid the correct wages, that the correct amount of tax and National Insurance is being collected, and that any benefits or expenses are accounted for.
You also have a responsibility to HMRC to report your employees’ payments and deductions on or before each payday.
You also need to make sure any other payments, such as statutory pay, are correctly reported and claimed.
There are a lot of different moving parts, and you don’t have time to get your payroll wrong – if you have to run it late, you’re going to cause problems for yourself and your employees. Our advisors have years of expert experience and are well versed in all of the most popular payroll software available on the market.
Get in touch with us today, and let’s have a chat about your existing payroll, whether it’s suitable for your needs, how it works compared to how it should, and whether it’s going to be the best option for your business going forward. We can’t wait to hear from you!
