Preparing your payroll records is an important element of accounting for any small business and applies even if you only have a single employee. Without accurate payroll calculations and records you can run into difficulties with Government legislation such as that for the minimum wage allowances.
Recent “naming and shaming” of businesses often show that well known companies have been shown to be underpaying their staff but often when you read a little deeper, this is not because of some malicious intent rather it has been caused by a payroll calculation error.
HMRC Payroll Duties
When you run a payroll system you have the following reporting duties including those for HMRC:
- Record an employee’s pay plus any other income such as overtime
- Work out any deductions such as tax and National Insurance
- Calculate the employer’s NI contributions
- Create a payslip for each person on the payroll
- Report all of this information to HMRC.
At the end of the tax year, 5th April a full payroll report for the previous tax year has to be sent to HMRC and each employee must be issued with a P60. The P60 is a record of all pay and deductions for that employee for a full year or part year if they joined you during the period.
Payroll Reporting Key Dates
Not all of this has to take place on the same day. The deadlines are:
- Update of employee records and payroll software from 6th April.
- Issue P60s by 31st May
- Report all employee expenses and benefits by 6th July.
As you can see from this short summary, Payroll is a complicated topic and one that must be carefully managed. Mistakes can cause friction with your employees and problems with HMRC. Back tracking and correcting errors will be very time consuming and possibly costly if you have made underpayments that need to be corrected.
MCC Accountants offer a wide range of payroll, bookkeeping and accountancy services for businesses across Worsley, Swinton, Eccles and arrange “drop-in” clinics for those who need some advice on how to tackle their accountancy needs. Please contact us if you would like to be kept informed as to when our next event is taking place.