Foolproof Payroll Checklist

Expertly manage compliance and achieve accurate results using our payroll processing checklist 

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 “prior to running payroll” checklist and a “post pay day” 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 the information and make all of your changes in one focused session. Of course, with a great payroll system like Aigence you don't need a payroll team, everything is kept up to date all of the time. Aigence becomes your source of truth no need to use a manual payroll bureau or payroll provider! 

Prior to Running Payroll: Gathering Essential Information and Ensuring Accuracy – Checklist

Step 1. Gather all variable employee information for the relevant dates (pay period)

This will vary depending on your payroll schedule and if you have hourly employees. If you run weekly payroll you might not need to do all the payroll tasks every week but it is good ideas to ensure all employee data payroll information are up to date each month. A happy workforce is one that is paid accurately and on time. 

If you are using a fully integrated employee management platform or your payroll software is tightly integrated with your HR software then this may have all happened in real-time. 

Step 2. Compile your changes, including any deductions or additions and tax code changes 

See the HMRC New Starter Checklist if any new employees do not have a P45

At the heart of any good process is accurate payroll data and employee details. 

Step 3. Enter the data into your payroll software: ‍

Depending on the solution you’re using this may be fully manual, or a mixture of automated and manual. All good payroll software will do Income Tax and National Insurance calculations. Aigence users will have most changes already captured and can simply view a list of them within their live payroll run. Aigence ensures that your payroll data is always up to date, recalculating net pay instantly a change is made. 

Step 4. Final review / Payroll Calculations 

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 5. Run payroll

You will now be able to run your payroll to calculate income tax, NI, pension contributions and other deductions. 

Step 6. Prepare and schedule employer 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 your team have their wages and you have successfully run 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 Pay Day 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. Note: With Aigence there are no tax forms EPS (Employer Payment Summary) and FPS (Full Payment Submission) are submitted automatically. Small business may be able to avoid making Employer NI contributions using the Employment Allowance. 

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.

Step 5. Final pay run of Year (Year End Only) 

At the end of the tax year your will need to make sure all your payroll records and related information are up to date. It is a good time to review your employee records as well. No need to employ a legion of payroll professionals this is pretty straight forward. 


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.

Feedback

We work to continually improve our information and guides. We want to deliver you the ultimate comprehensive payroll checklist for both your monthly and year end payroll processes. If you have any comments that could improve the contents of this guide, please let us know. 

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