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Payroll Services

Payroll is probably the biggest overhead for most businesses and also one of the most problematic given the ever-growing list of rules and regulations affecting how you pay your employees. Since 1944 all employers have been required by law to operate the PAYE system, whereby you deduct tax and NI contributions from gross pay and hand them over to the Government. Whilst most payroll systems are fairly easy to administer, you need to be aware of your legal obligations regarding issues such as holiday pay, sick pay, minimum wage, agency workers, maternity and paternity pay, student loans, redundancy and pensions.

There are many ways of running a payroll. The most common method for smaller firms is to out-source it to a payroll agency, who will do all the sums based on the information you give them and produce payslips and reports summarising total pay and PAYE liabilities. You can also do your own payroll from cheap off-the-shelf software packages, such as Moneysoft or Brightpay. Please note if you use the free payroll software offered by HMRC, PAYE Basic Tools, it will not produce payslips or calculate pension deductions under auto-enrolment. Whichever system you use, the most important thing is to make sure your payroll is being run by someone who knows what he or she is doing.

Every employee is legally entitled to a payslip showing how much he or she has been paid and all deductions made to arrive at net pay. If you pay your staff weekly, this means having 52 payroll runs a year calculating PAYE deductions each time. However, this is going to push the cost up considerably as most agencies charge a lot more for weekly payroll than for monthly. Either that or your accountant or payroll department will have to spend 4 times as long on this work. It may therefore be preferable to switch to a monthly payroll and tide your employees over with wage advances until they are weaned off weekly pay packets.

You must be very careful about who you put on your payroll and also who you don’t put on your payroll. Most employers know that you must not hire anyone who is not legally permitted to work in this country, which could be any person who is not an EU citizen and does not have the right visa. It is your responsibility to check this and it is no good just relying on a National Insurance card - you need to verify their identity and nationality too. At the same time, you must be wary of taking on freelancers who say they are self-employed. You need to be sure that they really are self-employed or you could end up with a very large tax bill for not operating PAYE on their earnings.

At Acumen we can either do your payroll for you or train your staff to do it taking into account any specific issues affecting your particular business. Please give us a call if you require our assistance for anything to do with payroll.

Information Sheets Payroll Tips
bulletpoint Payslips
bulletpoint Tax codes
New starters
Make sure all new starters hand you a P45 or ask them if they have (or had in the same tax year) any other jobs or pensions, as this will affect what tax code you use for them.
Leavers
Check if any holiday pay is owed to staff leaving the company and make sure it is added to their final salary.
Redundancy pay
Make sure redundancy pay is paid separately and confirmed in a letter so it is not confused with normal pay.
Maternity pay
Ask all female employees taking maternity leave for Form MAT1B and give them a letter of confirmation.
Pensions
Find out what your legal obligations are under auto-enrolment and follow them to the letter as there are stiff penalties for those who fail to comply.
Payroll account
Reconcile your payroll control account each month and make sure it matches net pay owing.
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