Want to get payroll right and keep your employees happy?
Business success is not just about driving sales and figures. In fact, in order to achieve success in business, it is essential that employers implement the relevant legislation. This is where compliance comes into play.
Employers are required to keep financial records and make deductions according to their legal obligations.
If you’re running a startup, or any limited company, keeping financial records is not just about keeping on the right side of the law; it’s keeping employees happy and informed.
And this is good for business. Running a successful payroll system provides clarity to everyone involved. Here are five tips to help you get payroll right for your company.
1. Record all payments made to employees
All payments to employees have to be recorded even if employees earn less than £116 a week. Employees are also entitled to a payslip.
All salary payslips have to include gross and net amounts, which in turn means that any salary deductions, such as tax and National Insurance contributions have to be calculated accurately.
Once completed, the next step is to report pay and deductions to HMRC in Full Payment Submission (FPS).
Paying the nation
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2. Employees records are essential
Make sure these are kept up to date and accurate. It is mandatory that details such as address, marital status and bank accounts are reviewed regularly. Failure to do so may result in a breach of compliance and result in a fine.
3. Knowing relevant legislation is key
Are there any schemes or benefit packages that employees need to enrol in? For example, in the UK, since 2012 that automatic enrolment in a workplace pension has become mandatory.
In other countries, a pension scheme is optional. HMRC provides extensive information about employees’ schemes and contributions you and your employees are required to make.
4. Reporting to HMRC
Once payslips are completed, and all the relevant information has been compiled, the next step is to report pay and deductions to HMRC in Full Payment Submission (FPS) or Employer Payment Summary (EPS) in the case you are reclaiming any statutory payments. Incorrect information may result in overpayments or, worse still, fines.
5. Choose the right software
Finally, a big part of getting payroll and compliance right is about choosing the right payroll software. This means working with an integrated system that can handle multiple operations.
Some of the tasks involved include assessment of workforce, postponement, calculation of pension contributions, opt-ins and joining, opt-outs and refunds, generating communications to staff, keeping records and operating with some or all pension scheme providers.
The ultimate guide to payroll compliance
Facing the challenge of keeping up with payroll compliance? Read this guide for essential tips to make sure your business complies with the relevant payroll legislation.