How to Ensure Your Business’ Payroll is Correct
Payroll is a process of existential importance to any business with employees, whether PAYE or freelance. Accurate payment and the tracking of business cashflow are cornerstones of good business practice, with legal protections in place to prevent wrongdoing. As such, getting payroll right is of utmost importance.
The following tips constitute some basic guidance on managing payroll correctly, and ensuring your business is on the right side of your clients, employees, and the law.
Keep Accurate Records
The first and most important step to handling your business’ payroll correctly is to document and archive everything. Financial records are a must – every payment, tax liability and expense should be documented, alongside employee payment records – but personal information is also key to store correctly. In-company changes such as promotions or pay rises would be part of this personal information, but changes to address and bank account can also detrimentally affect your payroll, necessitating regular checks and updates.
Follow Payroll Legislation
There are many different rules and laws that legislate the correct and proper way to handle payroll in the UK, including the legal process for submitting employee pay and deduction information to HMRC via Full Payment Submission. Of course, legislation is subject to change, and without staying abreast of potential updates to payroll legislation you could find your business accidentally falling foul of the law.
Keep to Deadlines
Part of that payroll legislation covers the legal deadlines for submitting payroll information to HMRC. Tax months are standardised, running from the 6th of the month to the 5th of the next month. This makes understanding payments and tax liability much easier for businesses, as well as easier to manage for HMRC. Failing to send an FPS before the following tax month can lead to a late filing notice, while failure to pay relevant taxes to HMRC by the 22nd of the following month can lead to penalties and further legal action.
Utilise Audit Trails
Auditing is a process by which a company’s records and systems are rigorously examined and vetted, either internally or by an external organisation in accordance with International Standards on Auditing. Audits are used to discover flaws in processes or reported, allowing businesses to identify issues, and improve their operation. An audit trail is simply a complete chronological record of a given transaction, enabling you to track who engaged with a given process in payroll and when. This is useful for managing payroll compliance overall, as well as tracking down issues with individual employees’ pay.
Even in following the above guidance, payroll can be a daunting process to manage. If you still do not feel comfortable or qualified to handle the task, outsourced payroll management could be a comprehensive solution. Hiring outside experts to manage payroll on your behalf enables you to free up time focusing on business growth, while ensuring best practices are adhered to and minimising the possibility of internal fraud in the process.
These few tips above will help you ensure you’re on the right track with your business’s payroll.