While there are a slew of different things that you have to work on to improve your business, there are very few things more important than payroll. Just about every business with employees needs to make an effort to understand what payroll is and how its meaning can change depending on the specific situation and the nature of your business. This is why we thought it would be useful to put together an article on this subject. If this is something that you’re interested in learning more about, read on as we break down everything you need to know about payroll compliance and accounting.
What Is Payroll?
While it may seem straightforward, payroll can actually take on a slew of different meanings. Payroll can refer to the employees that you pay in addition to employee information. However, it can also refer to the amount of money that your employees are paid during the designated payment period. Lastly, it can also refer to the process of calculating and distributing wages all while accounting for taxes.
The Pay As You Earn (PAYE) system is used by the Her Majesty’s Revenue and Customs (HMRC) to collect income tax as well as national insurance payments from employees. Employers normally operate PAYE as part of their payroll operations.
Who Operates Payroll?
When it comes to who operates payroll, it’s best to understand the different options of doing things.
Firstly, you can opt to do everything by hand. Now, do know that this is the most tedious and time-consuming of all the options. However, if you want to be hands-on and fully involved, there are very few ways better than doing it yourself. Keep in mind that this option is not advisable if you don’t have a good grasp of how payroll works.
You can also choose to get a payroll accountant to do all the work for you. If you leave all payroll matters to the accountant, you’ll have more time to focus on other things. The accountant will handle the entire process for you, so you won’t have to worry about it. This is also the most thorough option, as the accountant will handle everything except for making payments to your employees.
Lastly, you can also utilise software to help you with payroll. Using software is quite commonplace, as it is relatively inexpensive and can save you loads of time. It can automatically calculate taxes if it is set up properly, and many of them can even turn in your taxes for you.
How Do You Set Everything Up?
If you do opt to do everything yourself, there are certain things that need to be done. First, you’ll need to register as a recruiter with Her Majesty’s Revenue and Customs, After that, you’ll be able to obtain a login for PAYE Online. After registering, it would be wise to choose a software to utilize as it will greatly help with calculating pay as well as any reductions you may be eligible for. From there, it will all be about keeping accurate records as it will come in handy because you will need to record pay and deductions and report to HMRC before payday. Lastly, the tax and National Insurance you owe the HMRC must be paid.
Conclusion
We hope this article proves to be useful when it comes to helping you gain a better understanding of how payroll works. While it may seem like a lot to take in all at once, this guide should give you a good starting point. Be sure to keep everything you’ve learned here in mind so that you can make the most informed decisions regarding payroll compliance and accounting.
Accountants247 provide cost-effective, high-value solutions to meet every client’s needs regardless of the size of your business. At Accountants247, we keep things really simple. You pay a single monthly payment to cover all your accounting requirements from your dedicated accountant. If you need accounting services in the UK, we’ve got you covered! Get in touch with us today and let us know how we can help!
