There are approximately 4.5 million private sector businesses in the UK, according to the Department for Business Innovation and Skills. Most of these businesses are owned and operated by one person and do not employ staff. More than 1.2 million of these private sector businesses have employees, and their staff members are one of the business’s top priorities.
Unfortunately being a good employer is not as simple as making a bank transfer each month. There are national insurance and tax laws which dictate how much needs to be deducted each month, how to issue staff payslips, and which records need to be available in case the tax man pays you a visit. All of these requirements are part of setting up a payroll system, and each small business may approach this issue in a different way.
Outsourcing Payroll
Many businesses do not want to manage their own payroll. These business owners find it easier to outsource this responsibility. A dedicated payroll business, like eBOS, call handle your business’s payroll and free up your time. The payroll service will ensure your business is in full compliance with all current legislation. This can be an enormous weight lifted from your shoulders because you know a professional is handling your payroll, so there will be no mistakes. A fast growing company will benefit from this service because it allows the owners and staff to focus on the business’s growth, instead of payroll responsibilities.
If you decide to work with an outsourced payroll company, communication is important. Be prepared to communicate with the payroll service regularly. You must tell them about any changes in your staff. The payroll company needs to know is someone is promoted, if anyone leaves, if people are working extra hours or if someone will have a long-term absence. Keeping the payroll service up-to-date on these events will ensure your employees get paid the right amount.
Managing the Payroll In House
Many companies prefer to manage their own payroll. There can be a downside to an in-house payroll system. The in-house system requires a dedicated member of staff, who would take care all of the payroll responsibilities. The staff member would handle all payroll issues, so it can help reduce external expenditures. This position may be taken by the director of a small company. However, as the company grows, a dedicated payroll team may be required.
The person in charge of payroll must have up to date knowledge of returns, PAYE tax systems, NI and other forms that are to be sent to HMRC. The payroll staff will also be required to inform HMRC of employees that are starting and leaving the company. The staff member in charge of the payroll must have knowledge of how to properly do their job and have an aptitude for numbers. Keep this in mind when seeking your new in-house payroll manager.
Digital Payroll System
In the past, payroll was done by manual labour. In recent years, digital payroll systems have made this task much simpler and manual calculations have become a thing of the past. A payroll system allows you to input data so that it can do the calculations needed to calculate deductions, produce the staff payslips, send a copy of the returns to HMRC, and print out P45, P 60 and any other forms required for employees. These systems can be difficult to master. It is essential that the person who handles the payroll knows which data to input and how to effectively use the program. This knowledge is essential if you want to do an in-house payroll system.
Digital payroll systems software can be downloaded into one machine or can be set up on an online portal, which can be accessed from any location. Whether you choose to set up your payroll system online or on a computer, consider the amount and types of information that will be transferred from your payroll system to your accounting system. Will your payroll system require information be entered manually or is your payroll and accounting software compatible? Having compatible software will streamline the accounting process.
Keep Up With Current Legislation
The biggest challenge faced by businesses who choose to have an in-house payroll system is the need to stay up to date with current regulations and changes in legislation. If you use a digital payroll system, your software should be updated regularly to meet any new changes in regulations. The staff member hired as payroll manager should also keep an eye on current legislation that may affect your business.
It is important that you find the right payroll solution. You will need to depend on their research and support in keeping you and your payroll manager up to date on any changes that affect your business’s payroll. The payroll system’s support team should be available to handle any technical issues that may keep you from paying your employees on time. You should be able to reach a specialist who can answer questions you may have about the payroll software.
If you choose to outsource your payroll, the service should be up to date on current legislation and be able to implement any changes in policy needed to meet new regulations. They should understand how these changes can affect your business from day one. If you are managing your payroll in-house, these responsibilities fall on you and your payroll staff.
Regardless of the type of payroll system you choose, you need to make sure it is the best option for you and your business. Payroll mistakes can be costly. Take the time to find the best solution. If you need more information about payroll or to get a ‘no obligation’ outsourced payroll system quote, contact eBOS today.