Small business payroll is the process of paying your employees, and it can be quite a daunting task if you’ve never done it before, or if you are moving software or suppliers. This article will guide you through what to do when you need to start running a payroll, what options there are for doing it, software to use and service professionals who can do it for you.
Let’s Start With Payroll Compliance
When you have a business with more than one employee, then it is likely that you will need to start running payroll. When this is the case, there are regulations that must be adhered to as it then becomes a legal requirement.
There’s a lot more to compliance than just paying your new employees though. There’s the salary calculations, holiday and annual leave dates, benefits, bonuses, and lots more. Compliance is also about taking the time to ensure that all of your workers are working on the right side of the law with regards to hours, breaks, and so on.
The Basics of Payroll
Are they an employee of the company?
If they’re an independent consultant or contractor they’re not an employee. They might be classed as a consultant or a contractor, or freelancer.
Do you have all their personal details?
As an employee they will be treated (and taxed) differently depending on their personal circumstances, so you will need information such as their marital status and date of birth, their start date, gender and full address. Ensure you have their bank details and that they’re correct. It’s helpful if all this personal information is stored in a secure place and is GDPR compliant.
Do you have all their salary and tax information?
You’ll need to know the information from the previous employment (if applicable), such as tax code, date of leaving, total pay, national insurance number and if there is any student loan information. Also make sure you include any bonuses specified in the contract of employment.
This information will need to be stored in your payroll records for 4 years (the current one and 3 following).
Record the employee’s working hours
And also whether they are working part-time or full-time or flexible hours. For a small business, it is best to record the hours on a monthly basis as it’s easier o keep track of the employee’s wages and pay them accordingly.This can be done using time sheets if the work is more flexible.
Ensure they’re they can enroll in a workplace pension
Employers have to provide a workplace pension scheme for eligible staff as soon as your first member of staff starts working for you. You will have to do this if:
- They’re between 22 and the current state pension age
- They earn at least £10,000 per year
- And they work within the UK (primarily)
You must also make sure that you make at least the minimum employers pension contribution.
