Keeping track of employees’ salaries with an effective payroll system enables a business to meet its legal obligations and manage finances in an efficient and timely manner. In order to create a robust structure, you need to keep your payroll organized and up to date to prepare yourself for the year-end rush.
In the UK, the key dates to plan for are 5th April, which is the final day of the tax year, and 6th April, which is the start of the new one. As an employer, you will need to issue a P60 to every employee who has worked in some capacity prior to 5th April. This document will summarize how much tax an employee has paid during the year. Failing to issue P60s by 31st May can result in a fine from HMRC, so it’s important to deliver them on time.
You can use cloud-based payroll software from Sage and other providers to generate and manage P60s online. This process can contribute to your broader financial reporting responsibilities, which can be collated in balance sheets. You will need to create a balance sheet to list your assets and liabilities and balance the books, ideally on a monthly or quarterly basis.
These tasks highlight the usefulness of a payroll calendar, which again can be created using software to help both staff and employees to meet deadlines. This calendar will also help you to plan for the challenges ahead. Do you have enough staff to manage the tasks, and are there any other factors that could potentially disrupt payroll processing in the coming months?
Now that you are sure that you have enough time and resources for payroll management, you can begin looking at the data you need to track and manage during the year. It is important to keep on top of everything month by month as this will make the final sweep at the year’s end easier. Things you should consider include how long deductions take to process, benefits outside of payrolls and ex-employees. When an employee leaves, you need to issue a P45 and remove them from the payroll moving forward.
During the year, it’s also important to get everything right in your Employer Payment Summary (EPS) and Full Payment Submission (FPS) reports as they are difficult to amend after being submitted to HMRC. Making sure that payroll data is always accurate is, generally, a good habit to get into as it will reduce the burden of additional admin during the busy end of the year.
Arguably the best update to payroll management that a business can make is switching over to HMRC-approved payroll software. Trying to manage everything through spreadsheets, which exist in silo, is laborious and time-consuming. There are other benefits to software in that it updates automatically to take into account the tax code and other legal changes.
That said, you should always keep abreast of new laws and reporting rules so that you don’t run into problems and potential fines and legal action at a later date. To conclude, using software, getting data right the first time, and being vigilant about changes to laws, regulations and compliance will make it much easier to manage your payrolls.
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