Thursday, July 13, 2017

15 Tips For Managing Your Own Payroll

by Graham McKenzie, Global Tax Director at activpayroll 

money money

There’s more to the payroll process than delivering wages on time – beyond the number-crunching and pay-deadlines, your system needs to remain compliant with a complicated set of rules and regulations.

Although many businesses choose to outsource payroll to third-party organisations, for a range of reasons others may decide to keep the process in-house. Internal payroll offers control, security and potential financial savings – but getting it wrong means incurring potential financial penalties, damaging your reputation with clients and, worse, losing the confidence of your employees… so it’s important to know what you’re doing.

Deciding to run an internal payroll can be daunting. To help you find your feet, check out our 15 tips for managing the process successfully:

1. Register with HMRC.

The first item on any business’ internal payroll agenda should be to register with HMRC and sign-up for the PAYE system – you won’t be able to pay your employees until you do. The registration process can take up to 6 weeks, so ensure you’ve left enough time before your first payday.

2. Payroll frequency.

Working out when you’re going to pay your employees – weekly, fortnightly, every 4 weeks, or by calendar month – is an important payroll consideration. Your pay schedule shouldn’t affect cash flow in other parts of your business.

3. Know your payroll deadlines.

This may go without saying, but every payroll department should know its numerous important dates and deadlines inside out, including the UK’s tax year (6 April, to 5 April), and the monthly deadline for PAYE and National Insurance remittance to HMRC.

4. Understand payroll compliance.

Legal compliance is integral to the payroll process which means employers running an internal system must understand their responsibilities or face penalties. Compliance can be daunting, and involve issues like tax and social security obligations – be confident you, and your payroll employees, have the expertise to navigate the administrative labyrinth.

5. Payroll infrastructure.

Think carefully about the type of payroll infrastructure you need to create to get the job done every week, or month. Will you require one or two payroll administrators – or an entire team and department? Will you need to allocate dedicated space within your premises? What hardware will your employees need? How will you deliver payslips?

6. Hire payroll employees.

Depending on the size and complexity of your payroll (and the need for compliance expertise), it may be necessary to hire new staff. While business, accountancy and maths qualifications are useful, look out for candidates with recognised industry accreditations, from organisations such as the Chartered Institute of Payroll Professionals (CIPP).

7. Invest in payroll software.

Almost all businesses use some sort software to assist with the payroll process, including the popular Sage, and Xero platforms. It’s about more than acquiring a new toolset – ensure you’re also able to train your employees to use your software, and are happy with the administrative support it offers.

8. Record employee details.

Good payroll is built on small details, especially when it comes to recording information about the employees in your system. Unfortunately, there’s no shortcut: take the time to ensure details are recorded correctly – or run the risk of seeing minor errors snowball into major problems.

9. Overtime and expenses.

If your employees frequently incur overtime or expenses, you’ll need to set up your payroll to calculate and accommodate these extra payments efficiently. With this in mind, it’s important to build flexibility into your payroll infrastructure.

10. Prepare for new legislation.

The payroll landscape shifts constantly, and your payroll administrators must stay on top of changes which may affect your business. HMRC’s new digital tax accounts are the latest example of  a drastic change to the PAYE system – keep your administrators up to date with regulatory changes through industry journals, and official HMRC mailings.

11. Offer payroll training.

To ensure your staff are able to deliver compliant payroll, and to meet their own personal career goals, it’s worth exploring opportunities to deliver training and career development. Industry bodies like the CIPP offer a range of certifications and payroll training courses which promise to benefit both your employees, and your business, in the long-term.

12. Have contingency plans.

The payroll process is full of challenges and obstacles which threaten your ability to pay your employees on time. With this in mind, developing contingency plans for adverse situations during the pay-cycle (such as software failure or defaulted payments) is crucial.

13. Payroll record-keeping.

Payroll generates a significant amount of information – both physical and virtual. Although much of your payroll information may be stored digitally, it’s still important that you have a simple, efficient method of cataloguing and accessing it in the event of an audit.

14. Implement payroll security.

By necessity, the payroll process involves a lot of sensitive personal data, including bank account details. Security breaches and data leaks are extremely damaging – so it’s essential your payroll administrators receive appropriate training in security and data-handling, and have an up-to-date response plan in place in the event of a breach.

15. Consider payroll outsourcing.

Handling payroll internally doesn’t mean you have to miss out completely on the advantages scalable outsourcing offers. You may decide to outsource only a certain part of the payroll process such as tax calculation, or logging work hours, or simply choose to store your payroll records in the cloud. Partial outsourcing often offsets its cost with the efficiency benefits it brings.

Create a living payroll system…

Challenges are inevitable when you set up an internal payroll system, but the process is too important to treat casually. Unfortunately, there’s no one-size-fits-all solution, but handling the process yourself offers the opportunity to meet your unique business needs. Whatever shape your payroll takes, it’s important that you treat it as an organic part of your business – which means helping it grow and change just as you do.

 

Graham McKenzieGraham McKenzie is Global Tax Director at activpayroll and heads its Global Mobility Division and has over twenty five years of global mobility experience. A qualified tax professional, he has worked for HMRC and the Royal Bank of Scotland, and is a member of the Association of Tax Technicians (ATT).



from Young Upstarts http://ift.tt/2sTqh6m via website design phoenix

No comments:

Post a Comment