Did you know that April is Stress Awareness Month? Being a business owner can be stressful at times. Growing your business to the point of needing employees can add even more stress! You’ll need to:
- Recruit the right person for the role
- Negotiate the right terms and conditions
- Organise employment contracts and register as an employer with HMRC
- Invest in tools and equipment so they can do their job
- Pay them on time and correctly!
As well as paying the employee, you’ll also need to pay tax and National Insurance contributions to HMRC, and set up auto-enrolment with a pension provider to provide a company pension scheme. Finally, as well as the regular payroll reports you need to submit, there are annual reports and admin to complete as well.
As you can see, becoming an employer and running a payroll can add a lot of responsibility to your shoulders, taking up more of your precious time. Time that could be (and needs to be) focused elsewhere on your business. This is why outsourcing payroll is a common solution for growing businesses, but it isn’t the only option.
Can I run payroll myself through my accounting software?
If you’re happy to allocate the time to running payroll yourself, you could do that. If you have accounting software already in place, this is a logical route to investigate. Most of the major accountancy software providers have a payroll module or add on to integrate, which will record payroll runs in the company accounts.
If you choose this option for your payroll, you need to understand that you are entirely responsible for providing all the information and data that the system will use to calculate the payroll. This isn’t just the rate of pay and hours/days they have been worked. Every member of staff needs to have correct contact details, date of birth and National Insurance numbers for accurately reporting to HMRC. Any error can put you at risk of not being compliant, cause additional work to resolve and potentially delay paying the employee or HMRC on time.
You’ll need to invest time in learning the payroll system and allocate time each week or month to run the payroll. Ask yourself – could this time be better utilised elsewhere in the business? A payroll professional is likely to complete the work in less time with higher levels of accuracy.
Payroll is a specialist skill
Running a payroll isn’t just about paying each employee the right amount of pay each time. You also need to consider holiday pay, sick pay, ad hoc or regular overtime, and performance related pay. All of these elements can vary from each payroll run, and getting any of them incorrect could see you breach employment legislation. For example, if you have an employee who regularly works overtime, they are entitled to additional holiday.
Having knowledge of the relevant UK legislation is essential and must also be kept up to date. In April 2024, we’ve seen changes to eligibility for National Living Wage rates as well as the annual minimum wage rate increases. New legislation for Carer’s Leave has also been introduced, permitting employees to access one week of unpaid leave each year for carer responsibilities. This would all need to be recorded through the payroll process in the right way.
About the payroll team at Accounting Clarkes
Our payroll services are looked after by Chris and Gillian. They both have extensive experience in payroll. They fully understand key payroll matters and legislation and have many years experience running payroll in both small and large organisations. They understand the pressure a business owner feels to ensure each and every payroll is run accurately and on time. Many of their growing clients outsource payroll to Accounting Clarkes once they take on their first employees, assured that this area of their business is correctly managed.
If you’d like to discuss your payroll needs with Gillian or Chris, call 01252 612484 for a friendly chat about your business.
