As a small business owner, you are probably not expertly trained in accounting or finance which means processes like payroll are quite a bit out of your comfort zone. You might want to look into small business payroll software in order to help guide you through the process and store all your payroll information. However, for the basics, here are a few tips on how you can manage your payroll.
1. Decide on a payment schedule and salary status
Pay frequency or pay schedule – this is when you pay your employees and how often. Check all the relevant rules and regulations to make sure you are meeting minimum payday laws. Payroll schedules can be weekly, bi-weekly or monthly and it is important to keep it consistent and pay your employees on time.
Salary status – this is how wages are computed e.g. an hourly rate or a salary.
2. Understand and abide by the laws.
No matter how small or newly started your company is, you must comply with all UK laws around pay. Make sure you are paying the right tax and national insurance for your employees. You should also consider the rules around auto-enrolment and ensure you have a workplace pension set up for your staff.
3. Set up a payroll system.
A payroll system can be manual, or you can outsource this task to an external company but paying for payroll software is a great medium ground. Software is much cheaper than hiring a professional accountant but takes a huge weight off your shoulders with regards to calculating and managing your employees’ paycheques. An online service can help you with paying your taxes and does all the heavy work for you, leaving little human invention to manage it effectively.
4. Outline your policy and processes.
You need to establish a standard payroll policy before you run your first payroll. Management, HR, and all your other employees need to be on the same page about how it works, when the payroll period is and how many benefits they have, such as overtime pay.
5. Use time-tracking systems.
A timekeeping system is a common tool used by companies to track their employees’ productivity and calculate their wages – this is especially relevant if you are paying hourly. Time-tracking can help monitor employees’ attendance and track any overtime they do.
6. Track your cash flow.
The most important thing about payroll is to make sure that you can pay it! Keep track of your cash flow and monitor any issues that may arise such as overstaffing or overpaying. If you are going through a financially stressful period delaying wages or downsizing are extreme solutions that should only be entertained as a last resort.
7. Maintain employee records.
There are laws with regards to retaining and storing all your payroll records in case of an audit. Payroll software can help store and sort all these records, making them easy to access quickly and can stay on record for many years.
Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence.