• Posted 21st August 2015

Running a Payroll: Things to Keep in Mind

When it comes to a common problem that every business owner faces, the first place goes to none other than the payroll challenges. Being a business owner, such payroll issues are the number one cause of your employee dissatisfaction. So, how should you run your payroll to avoid any problems in the future? First of all, you need to perform certain work during each tax month, which normally runs from the 6^th of one month to the 5^th of the next month. If you fail to pay your employees in a tax month, make sure you inform the HM Revenue & Customs (HMRC). Each time you pay your employees, you need to use your payroll software for many things.

• Record your employees’ salary or wages ( record even if wages is £112 a week)
• Calculate deductions like tax and National Insurance from your employees’ salary ( deductions are worked out by using your employees’ tax code)
• Produce payslips for each employee ( payslips should contain deductions, pay before and after any deductions)
• Send a Full Payment Submission (FPS) to the HMRC

When paying your employees, if you forget to send an RPS, HMRC will send a late filing notice or may charge penalty. The FPS should contain employer information, employee information, pays and deductions and National Insurance information. You may also need to report extra information on FPS if it includes a new employee, an employee leaves and changes his/her address, you have started paying someone a workplace pension, and it’s the last report of the tax year. On the other hand, if you find any errors in FPS, you should correct them immediately. Apart from the salary you pay to your employees, you also need to keep records of other payments. They include bonuses, commission, holiday pay, medical suspension payments, and maternity suspension payments, guarantee payments, office holders’ payments, inducement payments, and cash prizes for competitions. If you keep all these basic things in mind, it will help you manage your payroll without any fuss. And, if you want more information on running your payroll, you can get in touch with our specialist accountants today.