While the majority of firms with paid employees prefer to outsource their payroll process to an external accountant or payroll bureau, it is entirely possible to handle your business’ payroll yourself. This course of action is most suited to very small businesses with few employees and limited resources, and still requires a degree of computer literacy, excellent organisational skills and a substantial amount of elbow grease.
If you do wish to set up a company payroll yourself, there are a number of things you must ensure you do before, during and after the fact. Here’s a quick rundown of what’s involved with rolling with the punches and handling your own payroll.
- Understand all your obligations as an employer. The government’s PAYE webpage is a great resource for this, while their helpline (0300 200 3200) is also useful for answering any other questions you might have.
- Decide how and when to pay your employees. Will they receive an hourly or salaried wage? Will you pay them on a weekly or monthly basis? Will you allow overtime, sick pay, holidays or any other considerations?
- Register online with HM Revenue and Customs (HMRC) and obtain login credentials for the PAYE Online site.
- Select a payroll software package to record and store your employees’ data, make calculations about payments for each one and any relevant deductions and report that information to HMRC. There is a full list of compatible software on the government website.
- Inform HMRC about your employees.
- Open a separate bank account specifically for payroll and set up direct debits for each of your employee so that their stipulated wage arrives on time every week or month.
- Collect and store detailed records on all of your employees, their wages, bonuses, deductions and any other relevant information.
- Issue payslips to each individual employee.
- Record payments, with relevant deductions, and pass on the information to HMRC on or before the first payday.
- Obtain payment totals for tax purposes.
- Submit annual PAYE reporting to HMRC.
- Pay HMRC the taxation and National Insurance that your company owes.
In addition to the above steps, you’ll also need to keep abreast of specific employer codes, issue P45s and P60s to outgoing employees and constantly update the system, among many other concerns.
Getting professional help
As you can see, there is a significant amount of legwork and no little concentration involved in doing your own payroll, which is one of the major reasons why the vast majority of businesses outsource the process to an external professional company. Factor in the huge fines that can be incurred if you inadvertently make a mistake or do not comply with HMRC’s strict rules, and it’s easy to see why outsourcing is such an attractive option.
Fortunately, professional accounting and payrolling services can now be obtained at very competitive prices. At Profile, Chartered Accountants and Registered Auditors, we offer a range of services and packages – including comprehensive payrolling – tailored to meet the needs of small- and medium-sized businesses which don’t have the extensive resources of larger companies. With more than 16 years of experience in the industry, we have the expertise and knowledge to take your business to the next level, all at an affordable price.
To find out more about our services, get in touch with us at [email protected] or give us a call on 020 8432 2289 today. We’re waiting to hear from you.