This is a key decision for most small businesses. Small businesses tend not to have a dedicated payroll/HR department. It’s often looked after by one of the directors/managers for whom it is one of many other responsibilities. As an outsourced payroll provider, we’re here to make our client’s lives easier by providing a quick, efficient and accurate payroll service, so they can get on with running their company. In this article we take a quick look at some of the key things involved in running a Payroll.
Firstly there is PAYE
If you’ve been running your own payroll, you won’t have had to deal with PAYE, until recently. PAYE ensures that employees pay tax as they go, with deductions for tax and NI made throughout the year, generally month by month
If you choose to run your own payroll, you will have to learn how the software works and input the data correctly, all of which takes time, which might be in short supply.
On top of tax and NI, you’ll also need to add in all the relevant deductions, which can include some or even all of the following:
- Student loans payments
- Union subscriptions
- Sports or social group subscriptions
- Voluntary pension top-up payments
- Workplace Pensions
Holidays and Maternity and Sickness Payments
Holiday, maternity and sick pay and maternity pay all need processing. It is the company that pays, not the government, so it’s up to you to follow the process and get it right.
One of the biggest challenges in managing a payroll is keeping up to date with changes in legislation, which happen with alarming and consistent regularity, every year.
These normally focus on new tax and NI rates, but sometimes much bigger changes come in, which require significant changes to payrolls. The introduction of workplace pensions and automatic enrolment appear was one of these, as was student loans.
Keeping on top of new legislation and getting it right is time consuming. Get it wrong or fail to comply and fines loom.
Expenses and Benefits – P11Ds
All qualifying expenses and benefits in kind must be processed via payroll, accurately and on time. Failure to do so can, again. Result in fines.
Payslips are a legal requirement, and should include the following items, at least:
- Gross pay
- All Deductions (tax, NI, pensions, student loan payments)
- Net pay
- Method of payment
You don’t have to issue a paper payslip anymore. More and more are doing so electronically. As always, this takes time and it must be done securely. Get it wrong or run a system that gets hacked and you are contravening the GDPR rules.
Still Happy Running Your Own Payroll?
All of our clients are small businesses who got tired of running their own payroll. They found it time consuming and were worried about making mistakes and incurring fines as well as the dissatisfaction of their employees.