How to manage payroll efficiently

You need to find a payroll system that works for you and your team. It’s important to get the payroll system right to reduce the chance of errors. If you make a mistake with the payroll, you risk reputational and financial damage. The HMRC could fine you, and you may develop a bad reputation as a company.

Payroll includes numerous financial processes, from taxes to compensation claims. If you are handling payroll, you should be able to calculate net and gross pay, consider statutory sick pay and much more. You need to calculate each employee’s tax deductions, including income tax, NIC, student loan payments, pension schemes and childcare vouchers. You need to understand how tax works in the UK to calculate each employee’s wage accurately. There is a lot more to payroll than you might think at first glance.

You should also complete annual payroll reports for HMRC and issue the appropriate PAYE forms. Make sure your business has up to date payroll records for the last three years.

Here are a few ways you can make the payroll system more efficient.

Keep track of employees

Larger corporations have a lot of employees, all with different circumstances and salaries. You need to keep track of employees and make a note of anyone on long term sick pay, maternity/paternity leave or those entitled to a bonus this month. You are far less likely to make a mistake and underpay your employees with an up to date record system.

Or, you could use payroll systems to keep track of this information for you. You can record changes in the employee’s working hours and add different circumstances when needed.

Effective payroll projections

Every business needed a budget. Your budget should change as your income and circumstances change. For example, many businesses would have cut down their budget during the pandemic. The payroll team needs to be aware of any huge changes in the budget.

Payroll budgets should calculate how much your employees cost with their salary and tax. You can use this data to evaluate whether you can afford a new hire or even your current team. For example, the pandemic caused a major economic change around the world and companies had to take a closer look at the numbers. You need to be prepared for these changes and respond accordingly.

Use technology

It’s time to utilise the digital world and use online time and attendance systems. You can reduce the number of fraudulent submissions and make sure your employees are working during office hours. You can ask employees to clock in and off through their smartphone or swipe card. The payroll team can consult the attendance system and make sure each salary is correct.

It’s time to digitise your payroll system with highly efficient software.