Whilst the team that you have behind you are one of the most important factors in propelling your company to new heights, employing people within your organisation at all levels comes with one rather frustrating and daunting task – managing payroll.
Every employer, whether your team consists of five or 500 employees, must by law manage and process payroll effectively and efficiently. As North East England’s leading accountant, we have helped numerous companies across Newcastle-upon-Tyne with our no quibble and professional payroll services.
Here we provide an essential guide for employers wishing to manage and run payroll in a timely and legally compliant manner.
What to do before payday
Every employee looks forward to payday, whether wages are paid weekly or monthly, but the same can’t be said for employers! But there’s no need to dread the approach of payday, instead utilise the following steps to ensure you are as prepared as possible.
- Record wages, salary and other payments (such as Statutory Sick Pay, Maternity Pay, Paternity Pay and Adoption Pay) accurately
- Calculate tax and National Insurance deductions in advance
- Calculate your own contributions, including your National Insurance contributions
- Produce payslips for each and every employee
- Report pay and deductions to HM Revenue and Customs (HMRC) using Full Payment Submission.
If you fail to report pay and deductions using the FPS process, you may face penalties. Late reporting penalties have also recently been enforced.
What to do after payday
There are also a series of tasks that must be completed after payday has been and gone. Any reductions due can be claimed. An Employer Payment Summary must be submitted by the 19th of each month to calculate statutory payment reductions. You can in turn view how much you owe HMRC using your online account, any payments seen here must be paid by the 22nd each month.
If you do not pay the amount due by this date, interest will be added accordingly.
What to do at the end of the tax year
Whilst there is a long list of ‘to dos’ prior and after payday, expenses and benefits should be reported at the end of the tax year. As part of an employee’s role you may provide a selection of expenses or benefits, including accommodation, bicycles, bonuses, business travel allowances, childcare, clothing, company cars, computers, holidays, homeworking, phones and gifts.
All expenses and benefits must be reported to HMRC by 6th July, this can be taken care of in-house using payroll software or with help from a qualified accountant.