If you employ any staff through your small business, then you need to set up a payroll. This can help streamline the money you pay to employees and make the payment process run much more smoothly. Below, we explore how to set up a payroll for a small business.
What is a payroll?
To begin with, a payroll is the list of your employees and how much they earn. From this payroll, you can create your employee payment process. This will calculate monthly wages, factor in bonuses, pay employees’ taxes and National Insurance, before ensuring that the money lands in the right accounts. This is crucial for quickly and efficiently remunerating your staff.
To streamline the payroll process you can always outsource this task to a Global PEO able to help you around the globe while you are being compliant with the local laws.
There are six steps to setting up a payroll for a small business, and it’s important to follow each part carefully.
- The first step is to register as an employer with HMRC – this will give you access to the PAYE system online.
- Next, you’ll need to select your payroll software. This will make deductions, store employee details and report payments to HMRC.
- The third step is to record and keep records while respecting privacy laws.
- At this point, you’ll also need to tell HMRC about your employees – e.g. how many people work for you and what their roles are.
- The fifth step is to record pay, make deductions and report this process to HMRC on payday.
- Finally, you’ll need to pay HMRC the tax and National Insurance that you owe from this process.
By following this process carefully, you should be able to run a smooth payroll system. As your company grows, you may find that you need to hire people to carry out this process for you. This could be through internal hires, or by working with tax consultants to help make your process more efficient.
Deductions, pensions, benefits, expenses
There are other considerations too. For a start, you need to offer your employees a workplace pension. On top of this, you can entice talent into your company by offering benefits such as healthcare, childcare vouchers, extra holiday and the opportunity of flexible working. Plus, your existing staff may have put down expenses as part of their role that you’ll need to pay too. All of this combines with your payroll to create a complex payment process that you’ll need to maintain carefully.
The payroll is important for any small business. If you make mistakes, it can cost you plenty of time and money. But by following the advice above, you should be all set to implement an efficient payroll system.