Effective payroll management is essential for any business employing staff, no matter how few, requiring efficiency, attention to detail and a sound understanding of your obligations as an employer.
Getting to grips with the basics
Managing payroll encompasses everything from administering employee’s salaries on time, monitoring statutory payments and deductions, and keeping up to date records, to ensuring compliance with auto-enrolment regulations and making regular reports to HMRC via the Real-Time Information (RTI) Pay As You Earn (PAYE) system.
Where these things don’t happen as they should, and you fall foul of your responsibilities, you face the prospect of financial penalties, reputational damage and a discontented workforce.
What are my responsibilities when it comes to managing payroll?
- Register as an employer if employing staff for the first time
If you are employing staff for the first time, you will need to register for PAYE with HMRC. This should be done at least four weeks prior to the first payday.HMRC will issue you with an Employer Reference Number (ERN) which you’ll need to use when meeting your tax and reporting obligations.
- Manage employee remuneration and report to HMRC
When it comes to managing your employees’ remuneration, first and foremost you’ll need an understanding of what makes up their salary – i.e., basic pay, payment for overtime, bonuses and/or benefits.You will also be expected to accurately calculate and process tax and NI contributions, pensions contributions and other statutory deductions (for example, student loan or maternity pay).
In addition, all employers are required to comply with and pay the National Minimum Wage (NMW), as set by the Government. The NMW is the minimum rate of pay, per hour, that a worker is entitled to, and it is determined by the employee’s age and/or contract type.
In the name of transparency, and accuracy, details of what each of your employees has been paid, and had deducted from their pay, must be reported to HMRC each month in the form of a Full Payment Submission (FPS).
- Implement a robust, secure system for keeping records and processing payroll
If you are to effectively manage your payroll, you will need a robust and secure system in place, both for maintaining records and running payroll itself.Being clear about who is responsible for payroll within your business, maintaining current and detailed records about your employees whilst protecting their confidential information, and realising the role that technology has to play in supporting your efforts can set you on the path to payroll success.
- Communicate openly with your workforce
Whilst your workforce will certainly be happy with being paid correctly, and on time, they will also appreciate clear communication in respect of payroll – for example, where changing legislation impacts will have an impact on them. You should be in a position to confidently communicate with your team, and to respond to any payroll queries that they have.
- Stay up to date with payroll legislation and your obligations
As an employer, you also have a responsibility to stay informed about important changes to payroll legislation, to ensure compliance at all times. This may sometimes involve updating policies or procedures within your business, and so a proactive approach should be adopted wherever possible.
Streamlining your payroll function by outsourcing
Managing payroll effectively in-house is not impossible, but it can be extremely time-consuming and, at times, confusing – especially when you’re simultaneously trying to focus time and energy elsewhere in your business.
Outsourcing is often the answer to payroll headaches, since handing over to a team of experts can open the door to a streamlined function, peace of mind, and accuracy, allowing you to prioritise other core operations.
How can GH Payscheme help?
Payroll stretches far beyond just another ‘admin’ task, and is a vital function for any business employing staff.
At GH Payscheme, we offer a comprehensive, confidential and flexible outsourced payroll solution, that encompasses compliance, reporting and year-round advice.
No matter how your business changes, or how quickly it grows, we’ll be right behind you every step of the way. To talk to us about how we can support you with payroll, contact us today.