Running your payroll should be a straightforward procedure, wouldn’t you agree?
However in reality, payroll can be difficult to manage and errors can be costly, and can also create emotional wear and tear for business owners.
So, if you want to be sure you are getting it right, following our top tips to improve the running of your payroll could reduce your stress and ensure both you and your employees remain happy. (Make sure to think carefully about number 9, as it may just save you hours!)
1. Know your deadlines
Payroll have always been deadline dependent but since the introduction of RTI and Auto Enrolment ensuring you know your deadlines has become even more important and not just a once a year task.
Make sure you have a good system in place that alerts you to important dates and if you need to do anything.
Working ahead gives you time to sort out any issues that should arise.
Ensure you know when you have to:
- Pay your employees, HMRC, Attachment of Earnings orders.
- Submit Payroll returns RTI and Auto Enrolment Pensions Feeds.
- Produce payslips and P60s.
- Produce Auto Enrolment communications to your employees.
2. Training
Payroll Legislation is constantly changing and will affect how you need to run your payroll, so it is imperative that you keep abreast of major changes.
If cost / time are an issue HMRC have free webinars and emails that you can sign up to. These will help you to understand what you need to do and how to get it right first time.
https://www.gov.uk/government/collections/hmrc-webinars-email-alerts-and-video
3. Software
Keeping up with changing legislation can often be a challenging task for teams who run their payroll manually. Ensure you have a good payroll system, preferably one that comes with automatic updates and training from the supplier – ensuring your system is in line with the latest legislation changes.
HM Revenue and Customs (HMRC) has tested and recognised this free payroll software for businesses with fewer than 10 employees:
https://www.gov.uk/payroll-software/free-software
The following suppliers produce payroll software that has been tested and recognised by HM Revenue and Customs (HMRC):
https://www.gov.uk/payroll-software/paid-for-software
4. Understand workplace pensions
Have you heard about automatic enrolment?
If not, it simply means that your business, as an employer, even with just 1 employee, needs to put certain staff into a pension scheme, which you will make contributions towards.
Key sites such as the Pensions Regulator will have more information on workplace pensions.
5. Disaster Recovery
Are you a lone payroll processer? There needs to be more than one person who is capable of understanding and handling all payroll functions within the company to reduce the possibility of employees mitigate single points of failure.
Have you got a Payroll disaster recovery plan in place? Make sure you have reliable access to technical support and also a back up system in case any systems go down. If a plan does exist, does it take into consideration the statutory obligation to submit files under RTI? Is it tested regularly and up to date?
6. Ensure you do are not misclassifying employees and contractors
Understanding worker classification and getting it right is important as it impacts income and employment tax. It also impacts whether the worker is entitled to applicable benefits and how their compensation should be reported.
7. Manage employee expectations
It’s vital you ensure your employees understand what they need to do in terms of remaining compliant. One example of this is making sure they stick to your company’s expenses policy. Another is keeping overtime records accurate. Put procedures in place where you explain how to document expenses and overtime properly, so they don’t leave you exposed.
8. Check, check and check again
Payroll professionals are never thanked for paying their employees correctly, however an incorrect payment to an employee will not only result in angry staff but it could cause conflict within the business. On a more serious note a big mistake can have serious consequences with HMRC.
Be careful; take time to set up your employee details correctly on your payroll system ensuring you give yourself enough time to check your work. Try not to leave everything until the last minute.
9. If all of this is too much... You should consider outsourcing your payroll.....
Payroll can be complex but staying on top of legislation is important. As you’ve seen, there are a number of things you need to do to stay compliant, in fact the list is endless.
If you feel that you would like to free yourself of the chore of doing payroll then look no further.
To celebrate National Payroll week we are offering a free period to any employer who contacts us before 30th September 2021. If you transfer your payroll to our outsourced payroll provision your first pay period will be processed for free.
We are experts at what we do, and can save you the hassle of managing everything yourself:
- It frees up time and resources to focus on your core business
- It gives you access to more technology and expertise to perform payroll well
- It reduces costs and risks
If you would like to see how Prime could make your life easier simply contact us and we will arrange a no obligation meeting with our senior payroll manager, Kerrie Given.