Payroll is an essential part of your business; as well as issuing regular paychecks legally and on time to your employees, payroll is also responsible for handling payroll tax and deductions like benefits and pension payments and withholding taxes, such as for National Insurance.
If your payroll department falls short or makes a mistake it can have massive ramifications for you, your employees and your business. That’s why it’s vital for you to know what you’re doing and what is expected of your business in terms of basic payroll. We’ve put together a quick and handy guide on understanding payroll as an independent business.
Payroll: Outsourcing Companies
The first thing you need to decide is whether you want to take the time to deal with of all the responsibilities that come with managing your own payroll month to month, or whether you want to outsource the payroll process to another company and give yourself the time to focus on your business instead. In many cases this can be the right thing for your business; you’ll save you time and can feel comforted knowing that an expert payroll company is taking care of the bulk of the payroll responsibilities.
However, if you do choose to receive payroll services from a consultant, make sure they understand your business and are reliable and trustworthy. You need to make sure they are the kind of company or consultants you know will get the work done on time and precisely so you don’t face any problems with HMRC (HM Revenue and Customs). If you choose the right agency you’ll feel you’ll have some extra, expert support and one less thing to deal with each month.
Keeping Organised for Basic Payroll
Tax months run from the 6th of one month to the 5th of the next month. It is vital that you stay on top of things to make sure you get everything processed and submitted on time. Every month before payday for your employees you must record their pay, calculate any deductions from their pay such as Income Tax, calculate the employer’s National Insurance contribution that you’ll need to pay on their earnings, produce payslips for each employee and report their pay and deductions to HMRC in a Full Payments Submission (FPS).
All this needs to be completed accurately and on time. Then in the next tax month you’ll be able to view what you owe from your FPS online and claim any reductions. You have to make sure you pay HRMC by the 22nd online or face a penalty. With the right system you can keep on top of all these duties, but it can be time-consuming and is very detail-orientated, which is why sometimes outsourcing your payroll duties to a payroll consultancy firm may be right for your business.
Payroll Calculating and Software
These days there is some of the best payroll software out there to date which will help you report to HMRC. This software will also help you record your employee’s details and keep it up to date, working out how much you need to pay HMRC, calculating statutory pay (like sick pay or maternity leave pay), produce payslips and working out your employees’ pay and deductions.
This means your employees will all be getting the right pay and you’ll know you’re paying the right taxes – it makes life so much easier. There is plenty of choice of online payroll software, both paid and free – it’s just a matter of choosing which will be right for your business.
Companies such as Sage Payroll, Xero and APS (Automatic Payroll Systems Inc.) have great reviews at a varied price scale – but take a look online yourself to find out more about payroll software and working out which one is best for you. https://www.softwareadvice.com/uk/hr/payroll-software-comparison/
Payroll for businesses
Some of what your business is required to do for payroll depends on the scale of your business and how much you and your employees are earning each month, but the above points are key to every business as you begin to tackle payroll and all the responsibilities that come with it.
If you need more information, advice or support, feel free to get in touch with us at BNA Consulting – we’re always happy to lend a hand and provide you with expert financial advice.