We (hopefully!) won’t be surprising anyone when we say that managing payroll is an important part of any business. Ensuring that employees are paid accurately and on time is not only crucial for keeping your staff but also for complying with various legal requirements.
In order to make sure that your employees get paid correctly, you first need to make sure your payroll is set up correctly. This can be overwhelming, especially if you’re new to it, so we’ve put together this guide which goes over what you need to be thinking about.
1. Keep accurate personal records
First things first, you need to make sure that you have each employee’s personal details correct. Sounds pretty obvious, right? Whilst it’s obvious, it is important that you not only get the details right but maintain these records.
Employee details can change quickly, whether it’s something like their salary changing or they’ve moved house, so you need to make sure you’re staying up to date. It’s a good idea to regularly check employee details with them to ensure no details have changed. Remember, the responsibility to keep accurate personal records falls on you.
You may want to consider implementing a self-service payroll system where employees can access their payment information, update personal details, and view tax documents. This not only empowers employees but also reduces administrative burden, minimising errors in data entry.
2. Make sure you understand workplace pensions
Workplace pensions became mandatory in 2012, applying to all businesses regardless of their size. This means that even if you only have one employee, you are considered an employer and are therefore obliged to adhere to pension laws.
Are you up to speed with automatic enrolment? If not, it entails the responsibility of employers to enrol eligible staff into a pension scheme, where contributions are made by both the employer and the employee. It’s important you take some time to understand the pension scheme your business offers and how to accurately calculate contributions.
For further details on workplace pensions, sources like the Pensions Regulator offer information and your payroll provider should also be able to offer you some extra guidance.
3. Use audit trails
Audit trails may sound a bit complex and scary, but they’re actually just a handy way to track changes, ensuring accountability, and maintaining data integrity. Audit trails help identify errors or discrepancies, providing a transparent record of any changes made to payroll data. This validation process helps identify and verify any payments that appear unusual or out of place.
Other ways audit trails can help include:
Fraud prevention: Acting as a safeguard against fraudulent activities by offering a transparent record of transactions.
Accuracy of corporate accounts: Ensuring the precision and reliability of corporate financial records by tracing and validating transactions.
Insight into company health: Providing valuable insights into the overall financial health and performance of the company by analysing transactional patterns and trends.
4. Stay up to date with payroll legislation
Payroll legislation is subject to frequent changes. Staying informed about tax rates, employment laws, and other regulatory updates is key, but how do you do that? Participating in payroll seminars, attending webinars, and joining industry conferences can really help.
These platforms provide valuable guidance on a variety of subjects, including updates in legislation and emerging payroll trends. They offer a great learning experience, covering the latest regulatory modifications, industry advancements, innovative payroll practices, and other topics influencing payroll processing.
Additionally, your payroll software provider might offer advice and regular updates to ensure you stay on top of legislative changes. HMRC also shares news related to payroll legislation, so make sure you check in regularly and update your payroll processes where appropriate to remain compliant.
5. Understand international legislation
Another quick little point; if your business operates internationally or hires remote workers from different countries, understanding international payroll legislation is essential. Different countries have diverse tax laws and employment regulations, so make sure that you seek expert advice to ensure you’re staying compliant across borders!
6. Submit your payroll information on time
This is going to be another obvious point, but it’s important that you submit your payroll information on time. Managing payroll involves handling various tasks, including:
- Tax deadlines
- Adjusting paydays
- Quarterly reporting
Make sure that you allocate sufficient time to address these considerations effectively, otherwise you risk running over deadlines and being penalised. To aid in staying organised, consider creating an annual calendar. Include all key dates such as timesheet and invoice submissions, as well as payment due dates. This calendar acts as a reference tool, ensuring essential tasks are not overlooked or worse, forgotten about altogether!
Don’t forget about the big payroll year-end process either. This involves submitting final reports to HMRC by 19th April, while ensuring employees have access to their P60s by 31st May.
7. Talk to the experts
If you’re still feeling overwhelmed by payroll, and don’t feel 100% confident handling it yourself, you may want to consider outsourcing it to an expert. Consulting with payroll specialists or hiring experienced professionals can significantly speed up and streamline the setup and management of your payroll.
Experts can provide guidance on intricate payroll matters, advise on compliance, and help ensure you’re following the most efficient payroll processes. It also gives you peace of mind that you are definitely compliant and leaves you free to handle other areas of business.
Need help with your payroll or another aspect of your business finances? Please get in touch with the Trinity team and enjoy a free consultation!