The Small Business Guide To Payroll
According to statistics released by the department for Business Innovation & Skills, there are now an estimated 4.5 million private sector businesses in the UK. The majority of those businesses are one man firms that don’t employ any staff. For the 1.2 million businesses that do, paying their staff is one of their top priorities. But sadly it’s not as simple as doing a bank transfer every month. There are laws which dictate how tax and national insurance must be deducted, how payslips must be issued and what records must be kept for when the tax man comes a’calling. All of these requirements come together under the heading of ‘payroll’, which small businesses can approach in a number of different ways.
For many businesses the simplest way to manage their payroll responsibilities is to outsource them. Outsourcing your payroll to a dedicated payroll business like eBOS will help free up your time and ensure that you are fully compliant with the current legislation. It can be an enormous weight off your shoulders to know that your payroll is in the hands of a specialist and it is often preferred by fast growing businesses that have many other things to focus on. Another big factor if you do choose an outsourced company is communication. You must be prepared to communicate with them regularly but it is not onerous. All that’s really required is that you inform your payroll company whenever someone leaves, has been promoted, does extra hours or when something like long-term absences occurs. All these can affect the salaries and it’s important that they get paid and the right amount.
Managing Payroll In House
Many small businesses choose to manage their payroll in-house instead of outsourcing. The downside is it will take time or even a dedicated member of staff in order to take care of everything effectively, however it can help reduce external expenditure. In smaller companies a director will often take this on, but as the company grows you may need to expand this to a dedicated team. Whoever is in charge of running payroll needs to have an up to date knowledge of PAYE tax systems, returns, NI and other forms that will need to be sent to HMRC. Whoever is implementing payroll in-house will also be required to inform HMRC when an employee starts and leaves. Payroll is a complex job that requires a lot of knowledge and an aptitude for numbers, so bear this in mind when selecting your payroll manager in-house.
Digital Payroll Systems
Over recent years digital payroll systems have been released that can help take a large chunk of the manual labour out of the equation. A good payroll system will be able to do calculations based on the data you input, produce payslips, send returns to HMRC, print P45, P60 or other forms for employees. Learning how to use these programs effectively and what data needs to be uploaded can be tricky to master, but if you are dedicated to pressing on and doing your payroll in-house, it is essential. Digital payroll systems can either be downloaded software tied to single machine or in the form of an online portal that can be accessed from anywhere. Should you choose to go this route, you must consider how the information in your payroll system will be transferred to your accounting system. Will you need to input them manually, or could you find a payroll system that is compatible with your accounting system to streamline the process?
Keeping Up With Legislation
One of the biggest challenges for businesses opting to run their own payroll is keeping up with the constant regulation and legislation changes. Software packages should be updated regularly to ensure any new regulations are updated and your appointed payroll manager should be constantly keeping an eye out for changes. It’s hard not to overstate the importance of research and support in a good payroll solution. If you find there is a technical issue preventing you from paying your employees, having a specialist at the end of a phone ready to answer your questions is essential. An outsourced payroll department will always be up to date on the legislations, will understand how to implement them and how they affect your business from day one. But if you are managing it in-house this heavy responsibility falls upon you or your designated payroll staff.
However, you choose to manage your payroll, you need to be certain it is the right option for you. Mistakes with payroll can be costly, so taking the time to find a solution that suits your business is vital. For more information on the ins and outs of payroll or to get a ‘no obligation’ quote about outsourcing your payroll solutions, get in touch with eBOS for your consultation today.