How you can make your payroll run smoothly

The smooth running of payroll is vital as your staff are one of the most important parts of your business.

So, getting their pay right is crucial to calculate how much should be paid and what deductions are made for student loans, Income Tax and National Insurance, before filing with HM Revenue & Customs (HMRC).

For a smaller business, running the payroll can be incredibly time-consuming, but that is where payroll software and assistance from an accountant can really help.

What does payroll cover and what must employers do?

As an employer you should:

• Calculate salary or wages and any other pay, benefits or bonuses
• Calculate and make deductions for tax and National Insurance
• The National Insurance contributions from the employer must also be calculated
• Report all pay and deductions to HMRC in a Full Payment Submission (FPS)
• Produce payslips for each employee, which show gross and net deductions
• Deduct pension contributions from both employee and employer.

HMRC says it will send you a late filing notice if you’ve paid any employees and do not send an FPS or send one late.

They can also charge you a penalty unless you have a valid reason for reporting late. Late, missing or incorrect payroll reports can also affect your employees’ income-related benefits, such as Universal Credit.

Why use an accountant?

Accountants are experts in this field and their software is adaptable to the needs of a wide range of businesses.

How can an accountant help?

• A few days before payment is due, the accountant will receive information about the employees’ rate of pay and calculate and update the amount each is to receive
• They will add new staff members to the payroll and calculate, which employees need to be enrolled in the pension scheme
• They will send a draft payroll to the employer before it’s submitted to HMRC, showing deductions and net pay and there will be a chance to discuss any changes that may be required
• On pay day, the necessary submissions to HMRC and any pension schemes will be made.

Payslips will be sent out either directly to staff members, or to the employer to distribute and funds paid to employees.

They will also send out annual P60s and draft P11D returns for HMRC for any employee who has received benefits or expenses.

Most accountants can also assist employers with workplace pension requirements and can even make suggestions about tax-efficient benefit schemes.

Need help with payroll and related matters? Contact us today.