Expertly manage compliance and achieve accurate results
As a new business founder, keeping track of the many moving parts of your company can be a challenging task. One essential aspect of your business that requires careful attention is payroll. To help you stay on top of this crucial responsibility, we’ve compiled a comprehensive monthly payroll checklist for UK companies from two distinct perspectives: a “pre-running payroll” checklist and a “post-calculations” checklist. By following these steps, you can ensure you’re doing everything necessary to keep your employees paid and your business compliant with relevant regulations.
The information that goes into each payroll run is wide ranging and comes from many sources on a regular basis. There are two ways to handle this which is down to personal preference – the first is to update the payroll system every time a new piece of information becomes available, and the second is to collate all of the information and make all of your changes in one focused session.
Pre-Running Payroll: Gathering Essential Information and Ensuring Accuracy
Step 1. Gather all variable information about your employees:
– Hours worked (if not salaried)
– Bonuses
– Overtime
– Commission
– Unpaid leave
– Statutory sick pay
– Any other ad-hoc payments (such as back pay)
Step 2. Compile your changes:
– Starters and leavers
– Pension enrolments or changes in pension contributions
– Student loan commencement/completion
– Benefit changes
– Tax code changes
Step 3. Enter the data into your payroll system:
Depending on the solution you’re using this may be fully manual, or a mixture of automated and manual. Aigence users will have most changes already captured and can simply view a list of them within their live payroll run.
Step 4. Run payroll:
You will now be in a position to run your payroll to calculate income tax, NI, pension contributions and other deductions etc.
Step 5. Final review:
Before finalising your payroll run you should undertake a review of the data, including the draft pay slips, to ensure that everything looks correct. Unless this is your very first payroll run, you will already have a good idea of how most things should look and a good starting point is checking any unexpected variances from the previous payroll run. It is likely that these are driven by your earlier inputs, but mistakes can happen and anything significant should be investigated until you are satisfied everything is correct. If you have a process for sign-off by a company director or head of finance, this should be part of your final review.
Step 6. Prepare and schedule payments:
Depending on your payment processing method, whether through an integrated payment provider, BACS, or simply using online banking, set up all the necessary payments and, ideally, have someone else perform a final check for you. If you require someone else to authorise the payment, ensure this is done at this stage.
Step 7. Distribute payslips:
Congratulations on successfully running payroll! It’s always satisfying once complete. The final step is to distribute payslip information to your employees. With Aigence, employees receive notifications at the same time as payments hit their accounts. However, with other approaches, you might need to email payslips or upload them to a portal.
You’ve accomplished the crucial task of ensuring everyone has been paid accurately, and any expected changes are reflected in their payslips. Now that the vital steps have been taken, there are a few remaining tasks to wrap up your payroll process and guarantee compliance and accuracy. Let’s dive into the post-calculations checklist.
Post-Calculations Payroll Checklist: Ensure Compliance
Step 1. Ensure all records are updated:
HM Revenue and Customs (HMRC) require you to keep detailed records for reporting purposes and you may also need them for auditor inquiries. At a minimum these should include gross salary, tax deductions, pension contributions, and other deductions.
Step 2. Manage pension contributions and compliance:
Ensure pension contributions are calculated accurately and payments have been made to your pension provider in a timely manner.
Review your employees to ensure you are following guidelines on auto-enrolment and workplace pension responsibilities. Pay particular attention to recent starters if you have postponed their enrolment in the company pension scheme.
Step 3. Report to HMRC and schedule payments:
Send a Full Payment Submission (FPS) to HMRC and schedule your PAYE and NI payments to reach HMRC by the 22nd of the following month.
Step 4. Address employee enquiries:
Inevitably, there will be questions about changes, whether they stem from company decisions or tax code alterations issued by HMRC. It’s important to be prompt and thorough in your responses to any pay-related inquiries, ensuring employees feel informed and valued.
Summary
By following this comprehensive monthly payroll checklist from both pre and post payroll perspectives, you can alleviate the stress of managing payroll and remain focused on growing your business. Remember, investing time in understanding your responsibilities and staying organised will lead to a smoother payroll process and a more efficient business operation overall.
