To successfully run a business, making sure that employees are paid correctly and on time is key. No matter the sector in which your company operates, you are legally obliged to ensure your payroll operation functions properly.
The Need For Payroll
Payroll is not just used for providing your employees with their salaries. The system is also used to monitor holiday and sick pay and bonus payments. Every time you run the payroll system, you are required by the government to record your employees’ National Insurance and tax and report this information on the online PAYE system. There are strict penalties if this information is submitted late or if there are mistakes in the information your provide. It is therefore of utmost importance to have an effective payroll operation in place.
Filing Employee Details
As an employer, you must collect the appropriate information about each of your employees, including address, date of birth, full name, gender and National Insurance Number. By obtaining this information, all employees can be registered on the PAYE system. Every new employee’s P45 displays their tax code and pay-to-date from previous employment; if they do not have one they must fill out the starter checklist on the HMRC website.
It is essential that you report the details of gross pay, PAYE deducted, pay dates and statutory pay such as maternity and sick pay to HMRC for every employee, every time they are paid, via the Full Payment Submission (FPS). To calculate how much tax and National Insurance each employee owes, you must fill out a P11 form. This should be done monthly.
Deadlines for PAYE
HMRC has a number of deadlines throughout the year that must be followed. Tax and National Insurance payments should be received by the 19th of each month, or the 22nd if done electronically. Every employee must also receive a P60, which details their total pay and tax deductions, by the 31st of May each year.
You can run your payroll operation in a number of ways: manually; via dedicated software; or by outsourcing the work.
Manually managing your payroll system means that you are responsible for all aspects of payroll including documentation and providing HMRC with the necessary information. In order to do this, you’ll need to have a good understanding of payments and deductions, the laws regarding the minimum wage and how HMRC enforces its rules. The process can be very time consuming.
Payroll software has been created to simplify the payroll system. It calculates National Insurance and tax and automatically prints payslips each month. It also sends the relevant information to HMRC automatically. However, payroll software can be prohibitively expensive for SMEs.
Even the smallest of companies can outsource their payroll operations. In order to do this, they must provide the necessary information to their external provider of choice. These outsourced accountancy firms can produce payslips and send all of the required information to HMRC each month. Using external providers is often the most efficient method of payroll organisation; their expert knowledge is key to simplifying the process.
Salford Payroll Services
If you need assistance with registering employees and filing their details, reporting and PAYE deadlines, Salford payroll services provider MCC Accountants can help. Our team are trained and experienced in undertaking exactly this function and can administer a totally confidential payroll service for your company. For advice, call us on 0161 707 1500 or contact us.