How do I run payroll? | 3 minute read
Running payroll can be complex. But it’s important you get it right and ensure you meet the relevant requirements, while paying your staff correctly and on time.
Here’s our guide to running payroll.
Do I need to run payroll?
If you are a limited company and employ any staff, then you need to run payroll. You will need to run payroll for any employees working for your company, including yourself and any other directors.
If you are a sole trader, independent contractor, or partnership, you may not have to run payroll for yourself but will need to run it for any members of staff, including sub-contractors.
Typically, anyone with a contract of employment is an employee and payroll must be completed for them.
If you are liable to run payroll, it is important you do so in a timely manner to ensure employee satisfaction and retention. As an employer you are legally obliged to run payroll for employees. By not doing so you are in breach in legal compliance, rules, and regulations.
What information do I need to run payroll?
Whether you are running payroll for yourself or employed members of staff, to run payroll accurately, you will need information such as employee personal details, base salary, and employment benefits.
This information will help you calculate and distribute employee earnings, send accurate tax contributions to HMRC, and issue employee payslips.
In order to run payroll, you will need the following information for each employee:
Employee details
For each employee on payroll, you will need some basic details, including:
- Name
- Address
- National Insurance number
- Base salary
Hours worked
You’ll also need to know how many hours your employees have worked and overtime rates.
If you pay your staff on an hourly basis, rather than an annual salary, you will need to monitor their hours worked to ensure they get the right pay.
For all employees, you’ll need to keep a record of any sick days and any overtime they are owed.
Salaries
In addition to hours, you’ll also need to keep a record of how your employees are paid – hourly or on a salary.
If they are paid on a salary basis, they will receive a monthly wage, which totals their annual wage split over 12 payments. Alternatively, if they are paid an hourly wage, they will be paid for each hour worked.
Regardless of how they are paid, your employee’s wage slips must show their gross and net pay, as well as details of any deductions including Income Tax, National Insurance, pension, student loan, and employment benefits.
Tax and deductions
Every employee will pay tax and NI on their total gross pay. This is a legal requirement. However, the amount they pay will vary depending on factors such as how much they earn and their individual circumstances.
As the employer, it is your responsibility to ensure the correct amounts are deducted from their pay and paid to HMRC each month. It is important to keep a record of each transaction in preparation for tax audits and queries.
Benefits
If you offer a staff benefits package, this will need to be factored into your payroll as it may have an impact employee pay. Staff benefits often include health insurance, childcare allowance, and reimbursed expenses.
How do I run payroll?
There are a number of different ways to run payroll, typically:
Manually
Although this may be the most cost-effective option, it isn’t the most straight forward. Running your own payroll by hand can be complex and time consuming. You will need to ensure that you apply everything correctly and pay all the necessary taxes and calculations.
Payroll software
If you want to run your payroll yourself, but you don’t have the time or knowledge to manage it by hand, payroll software could offer a solution. However, it’s important to note that you will be required to pay for the system, keep an up-to-date subscription to access the latest features, ensure you choose the right solution, and ensure you input the right data.
Hire a payroll company
Many businesses of all sizes hire an accountant to take care of their payroll. Bringing in a skilled and experienced professional will ensure that your payroll is processed quickly, efficiently, and with minimum errors saving you both time and money.
Why choose Easypaye?
Here at Easypaye, our team of skilled and experienced Payroll and HR experts are ready and waiting to answer any of your questions about all of your accountancy needs. To find out more, or to discuss our services, please get in touch.
Searching for ‘Payroll Services Near Me? Contact Easy Paye Today
Whether you know exactly what you require from our payroll services or are simply toying with the idea of outsourcing your payroll don’t hesitate to touch with the team at Easy Paye.
We take great pride in providing a range of clients with a comprehensive range of payroll services across the UK.
We’re a friendly, approachable team, and we’re always keen to chat with businesses in need of payroll services. So, get in touch today to find out more about the services we offer and how we could potentially help you to streamline your processes, saving time, money, and resources.
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across Belfast, Birmingham, Bradford, Bristol, Cardiff, Coventry, Edinburgh, Glasgow, Leeds, Leicester, Liverpool, London, Manchester, Nottingham and Sheffield.
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