Thinking about paying staff on time and accurately whilst also trying to meet all the legal requirements sounds quite scary. But believe me: I’m a simple man, of average intelligence, and if I can do a payroll, then anyone can!  

 

What are your obligations in running a payroll? 

Without stating the obvious, as an employer you need to ensure that you pay your employees on time and accurately, and take into account the deductions of tax and National Insurance. You might also need to take into account things like sickness and maternity payments or student loan deductions.

 

 

  • As an employer, you must ensure that you're paying your employees at or above the National Minimum Wage. There are different levels of minimum wage depending on age and whether or not the employee is an apprentice. Find out more about the National Minimum Wage.
  • Employers must make sure that they keep their payroll records for at least three years after the tax year which they relate to. Some of these records include:
  •  -  Tax and National Insurance records for each employee for each pay period on a P11 Deductions Working Sheet.
  •  -  Records of the payments you have made to HMRC for each pay period on a P32 Employers Payment Record.
  • Employers are mandated to submit payroll records once a year to HMRC electronically by 31st May in the form of a P35 and P14.
  • Employers must provide each employee still working for them at the 5th April a record of their pay and deductions using a form P60.
  • Under the Data Protection Act, employers must ensure that information relating to employees is kept safe and secure.
  • Under the Employment Rights Act, employers must ensure that that an employee has a contract of employment. Employees are entitled to be told how their pay is calculated; this is often done by providing a payslip.

What are my choices in running a payroll?

You've got a number of choices as to how you take care of your payroll needs. Just choose whichever feels right for your business.

Do it yourself manually: You can choose to calculate your payroll manually using the HMRC tax and NIC booklets or using HMRC's free online tools.

Do it yourself with payroll software: If you want to save time, ensure compliance and keep control over how you pay your employees, there are some great pieces of specialist payroll software available on the market to automate your payroll. I would strongly recommend that you check that the software has been accredited by HMRC, but I'd also suggest you talk to your accountant to recommend a solution for you.

Outsource your payroll: If you want to concentrate on running your day-to-day business tasks, you can simply outsource the running of you payroll to a Payroll Service Provider or Accountant. Just make sure you choose one that still gives you an element of control over what you want and need.

Whatever you choose, make sure you get that crucial promise of on-going legislative compliance and support!.

DIY payroll? Here's how to get started

Anybody who has worked in a small business appreciates that everyone pitches in to make the business as successful as possible and it's always a case of "jack of all trades, master of none". My experience of small businesses is that when it comes to payroll, there's no dedicated department or in-house expertise: it's often done by either the business owner or it's allocated to someone within the business to look after on top of their normal daily duties.

Here's what I'd recommend:

Think about how often you want to pay your employees: This is usually something that you agree with your employees, but you may want to consider running a monthly payroll, as it not only saves you time, but also may help you with your business cashflow.

Put aside time and protect it: The best advice is often the simplest: put aside enough time to do your payroll tasks, preferably without any distractions so that you're focused on getting it right.

Register with HMRC for online submissions - to submit to HMRC you will need to register online.

What's coming soon around legislation for payroll?

As you'd expect, there is a great deal of legislation around payroll. A new requirement, Real Time Information, is being phased in from April 2013 and is mandated for all business by October 2013. This will require employers to submit information electronically to HMRC each time an employee is paid. 

This is quite a significant change to the way that you may have facilitated a payroll in the past. Whatever choice you make to fulfil your payroll needs, make sure you know what you need to do to stay compliant. If you're using specialist software, or working with an accountant or outsourcing agent, check with them to make sure they'll be able to make this process simple and seamless.

What if I need help and support?

Everyone needs help and assistance at some point, even experts! There are organisations out there that can help, including:

HM Revenue & Customs Employer's Helpline:0845 714 3143

HM Revenue & Customs Employer's New Employer's Helpline:-0845 607 0143

Business Link:- 0845 600 9006

Choose Sage for payroll

At Sage, we've been supporting small businesses for over 30 years. We can offer you a choice of desktop or internet-based payroll software, backed up by award-winning telephone support: choose from Sage One Payroll, Sage Instant Payroll and Sage 50 Payroll depending on what your business needs.  

Alternatively, you could let the Sage Payroll Outsourcing service handle it for you. Whatever you chose, you can be confident that we'll be ready for Real Time Information and any other legislative changes.

Don't take our word for it: 7.5 million employees in the UK are paid on time and accurately via Sage. That equates to one in every three employees employed in the private sector in the UK!  To find out more, call us on 0800 44 77 77.

About the author: Neilson Watts is an Associate Product Manager at Sage, with responsibility for feeding in customer wants, needs and wishes into Sage payroll products.  Neilson has worked Sage for 15 years and have spent the majority of this time working in our Customer Services department, supporting small to medium-sized businesses on how get the most of out our payroll software and helping them to pay their employees on time and accurately.