If you’re a director of a small business and you’ve decided to take on employees then you’ve probably pondered over the question – can I run my own Payroll? The answer is, yes you can!
but, is this a good use of your valuable time?
Below is an overview of the process as simply as possible from set up to running your own payroll – with a free downloadable template to help get you started! (further down)
When reading about how to run your own Payroll, consider the time that following these steps may take and think carefully about whether this is cost effective for your business. If you’re concerned then don’t worry, we have some more options for you.
1) The Set Up
Before you can start running a payroll you will need to set up a PAYE scheme with HMRC, this will provide you with a unique PAYE reference number and Accounts Office Reference which you will need to submit your payroll information to the revenue.
2) Payroll Software
Once the scheme has been established you will then need to decide and purchase a payroll software. There are numerous payroll software available with different pricing structures so make sure to weigh up the pros and cons of this before choosing the right one for your business.
Points you might want to consider when choosing a software:
- Can it produce pay slips for the employees?
- Can it undertake Auto Enrolment Processes?
- Can you have different pay frequencies if required? i.e. Weekly/ Monthly.
- Can the software send Earlier Year Updates/ Employer Payment Summary (EPS)
- Does the software accommodate GDPR requirements. Heavy fines/ compensation may be payable should you misuse personal data.
3) Auto Enrolment
Another element to consider is your legal responsibilities as an employer for Auto Enrolment. Since Auto Enrolment was introduced in 2012, all employers have responsibilities when it comes to their employees and providing an auto enrolment pension scheme, ensuring those who are eligible are enrolled into a scheme and that all employees receive the correct communications regarding their status and the options available to them.
This will require the company to put a pension scheme in place and ensure you as an employer meet the required deadlines for this. There are many pension schemes available to use – you will need to ensure the one you choose is Auto Enrolment Compliant! Non-compliance can result in fines being issued by The Pension Regulator.
4) Inputting Relevant Data
Once your PAYE scheme is in place and you have chosen your appropriate software you are now ready to start inputting the relevant data. This will include adding your reference numbers, setting up your employees and inputting any employer information. This needs to be accurate for the RTI submissions that you will make each pay period to be accepted by HMRC.
Payroll legislation is constantly changing, you must ensure that payroll software updates are done as soon as available and that you are up to date with any new legislations that are brought in. If you do not comply with these then there is a possibility as an employer you maybe incorrectly reporting employee earnings to HMRC and may receive severe fines.
Payroll Processing Responsibilities
There are a lot of things to consider and action when running a payroll, the frequency of the payroll depends how often the tasks need to be carried out for example, monthly or weekly. Below is a list of tasks that will need to be considered each time a payroll period is processed.
- Calculating accurate pay including Tax and National Insurance Deductions
- Auto Enrolment Tasks – Assessments/ Postponement/ Communications/ Enrolling Staff/ Contribution Calculations/ Pension Uploads
- Reporting to HMRC – FPS and EPS on time
- Paying Staff and issuing pay slips on pay day
- Paying HMRC any Tax and National Insurance Due by the deadline
- Applying any National Minimum wage Increases when necessary
- Monitoring and applying any Tax Code changes/ Student Loan Notices/ Postgraduate Loan Notices.
- Calculating any statutory payments that made become due: Sick Pay (SSP) Maternity Pay (SMP) Paternity Pay (SPP) Adoption Pay (SAP) and Shared Parental Pay (ShPP)
- Attachment of Earnings Orders
- Employer’s Allowance
- Apprenticeship Levy
- GDPR Responsibilities
- Recording Data such as: Holiday Leave/ Entitlements and Holiday Leave/ Entitlements (Maternity Leave, Adoption Leave, Paternity Leave, Sick Leave)
Other Options – Outsourcing
Whether you are running a small business payroll or large business payroll, payroll processing comes with much responsibility. This requires a fair amount of time taken out of each day so you need to determine whether your time is better spent elsewhere in the business. Our experience has shown that after a few months businesses come to recognise the benefit to them of outsourcing payroll.
If you’ve managed to read to the end of this blog and learnt that you would much rather outsource to a professional Payroll provider, then consider our Making Payroll Easy promotion. We are saving new clients hundreds with no setup fee and a free month of Payroll processing between Jan – April 30th 2020.
Stay up to date with our latest news, blogs and promotions by subscribing below!
If we’re online, send us a message! If you want to come in for a free consultation, use the form below