Payroll is an essential task in any business having employees. Proper financial management within an organization depends on economic well-being and a good work environment. However, it is not easy, especially for SMEs, to invest considerable time and effort in managing them.
Therefore, companies look for a payroll provider or a system to help them create and manage payroll effortlessly, and owners have peace of mind. The next hurdle is to choose the right payroll software for your business.
This payroll guide will cover everything you need to know about the payroll management system, including,
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What is payroll processing?
When your business expands, you need to hire employees, but paying them correctly and consistently can complicate things for new entrepreneurs and SMEs.
Payroll processing in an organization is the administration of employee payments depending on their type, status, salary and deductions. It includes filing payroll reports and paying correct employment taxes to HMRC.
Guide to processing payroll
Business owners use the PAYE system to pay their staff as a part of payroll. They must complete a set of tasks during every tax month from the 6th to the 5th of the next.
Initially, you need to register for a Government Gateway account and enrol for the PAYE for employers service to submit any information to the HMRC. After successful registration, you receive an activation code within 7 days and activate your account within the next 28 days.
Before paying an employee, you need to perform the following:
- Record employees’ pay, including salaries and any other payments like bonuses, maternity leave payments, and so on
- Calculate any deduction like tax and National Insurance
- Produce payslips
- Report HMRC about the payment and deductions in a Full Payment Submission.
Common Payroll mistakes
Some common payroll mistakes that entrepreneurs make include,
1. Missing deadlines
Consideration of payroll tax deadlines is much more critical than traditional tax seasons. It means you must stay on top of all the dates and update for any changes. Missing deadlines can result in hefty fines.
2. Data inaccuracies
Human error is inevitable, which results in data inaccuracies in your payroll. Another reason is not updating the payroll data frequently. Outsource them to companies offering payroll services London to reduce data inaccuracy and save on business overheads.
3. Misclassifying employees
Classifying employees is essential for businesses which include part-time and full-time staff, temporary staff and independent contractors. It helps you keep your income and employment tax correct and provides accurate details on employee benefits or compensation to the HMRC.
3. Staying GDPR complaint
According to GDPR, a set of new rules impact payrolls, like an individual’s right over personal data and the right to be forgotten. GDPR changes how you store your payroll data and provide them to employees. It is crucial to stay GDPR compliant or suffer from costly penalties.
Ways to choose payroll system for businesses
Companies hiring employees need a comprehensive UK payroll system matching your business. Here are a few things to consider while choosing a payroll system.
1. Security
One of the most overlooked features of an application is its level of security. However, it must be the primary concern while selecting a system to ensure your employee data and other financial data are safe.
Review the system provider’s security policy, and look for encryption and customer support.
2. Bank integration
You must understand how you are paying staff, whether via direct deposit or issuing bank cheques. Several payroll software allows bank integration but may cost you more than starter packs.
3. Record keeping
While running a payroll system, keeping records of salaries and deductions is crucial. Therefore, no matter what payroll software you are choosing, it must have the capacity to hold records and make them accessible whenever needed.
4. Easy to use
Get software with an intuitive interface and user-friendly to help you optimize time and improve productivity. Ensuring every employee’s payments after calculating their benefits and deductions requires extensive knowledge. Therefore, choosing the right software is essential.
5. Maintain compliance
To avoid penalties, the payroll system you choose must stay updated according to current legislation and government regulations.
6. Price
Price is essential when choosing a payroll process, especially when you are on a tight budget. Make sure the software provides all your payroll needs at a competitive price.
7. Schedule a demo
Many software comes with a free trial period or allows you to cancel your subscription whenever you wish. These trial periods ensure you understand the payroll process and see if the system suits your business.
5 Best Payroll Software
1. Xero
Xero is one of the top payroll software in the UK with a unique platform ability to scale up businesses. It has a 30-day free trial and a range of features, including HMRC submissions, work hour tracking, multiple pay rates, encrypted payslips, flexible calendars and expense refunds.
2. Sage Business Cloud
Sage Business Cloud is a Cloud barrel software that highlights the user-friendly platform of the software. It offers features that include RTI ready, payments and deductions, workplace pensions, payslips and automatic updates. It can integrate with several business management platforms and is HMRC complaint software.
3. Intuit QuickBooks
In 2014, QuickBooks acquired PaySuite and formed Intuit QuickBooks, a part of the payroll management system. This tool was initially planned for businesses in the construction industry and later became easy to adopt for other business sectors. Summerford’s features include automatic pension enrollment, real-time insights, working on construction industry schemes, payslip creation, HMRC submissions, video support and employee self-service.
4. Rippling
Rippling offers businesses exclusive services, including selecting a pay period, reviewing hours and initiating payments in less than 90 seconds. This platform is quite flexible, and employers and contractors can use it. Rippling keeps track of work for hourly employees, manages paid time off, handles compliance and tax filings automatically, and offers a reporting dashboard, real-time insights, and payment data.
5. ADP
ADP he’s one of the best Enterprise-scale payroll software in the UK, with a customer base of 1 million worldwide. It has a simple-to-use platform and is suitable for businesses of every size. ADP integrates time and attendance tracking tools, checks for data anomalies, processes payroll, calculates and pays payroll taxes automatically, takes care of tax and compliance filings, and helps you link to recruiting and talent management services.
Conclusion
Payroll processing is tricky and consumes a lot of time, effort, and attention to complete the entire process correctly. Therefore, it is advisable to look for the correct payroll system or hire an in-house accountant for the payroll department. However, getting software or outsourcing payroll tasks can be pocket-friendly options.
