Payroll is covered by tax law, which can be drawn out and complex at the best of times. Through accurate payroll accounting you can ensure that you stay on the right side of the law. Outsourcing is the practice of using an outside firm to handle work normally performed within the company. Small companies do this, as they have no other option. Why not outsource your payroll? Outsourcing can save money but that’s not the only reason to consider it.
There are many things that have to be factored in when deciding on who and how to operate your payroll and we will cover it all in this article.
Do you know what the National Living Wage is?
The rate of Minimum wage depends on the age of your employees and if they are doing an apprenticeship. If an employee is school leaving age, they should receive the National Minimum Wage. Age 25 and over should receive National Living Wage. The National Minimum Wages will apply for workers aged 24 and under.
The rates change every year, but are currently:
- 25 and Over – £7.50
- 21-21 Years – £7.05
- 18-20 Years – £5.60
- Under 18 – £4.05
- Apprentice – £3.50
Why You Need To Be Aware Of Real Time Information
Real Time Information is the most significant change ever made to the PAYE system. Real Time Information (RTI) does not change the way that PAYE is calculated, it just means that you make more regular submissions to HMRC.
Each time you pay your employees, you will need to submit your PAYE information to HMRC rather than just once a year at Payroll Year End.
Information is submitted to HMRC using a Full Payment Summary. If you have payroll software, it should generate this for you. HMRC will penalise you if you do not submit a Full Payment Summary when you are supposed to. They will also penalise if your payments are late.
You can get a penalty if your FPS is late, you didn’t send the correct number of FPSs or you didn’t send an Employer Payment Summary. The charges for these penalties depend on how many employers you have.
- 1 to 9 – £100
- 10 to 49 – £200
- 50 to 249 – £300
- 250 or more – £400
It is crucial you get this right, or you will be adding extra bills that you do not need.
The Pension regulator predicts that in the 12 months (from April 2017), there will be 1.2 million small businesses that reach their staging date.
For the first time, every employer are required by law to automatically enrol all eligible workers into a workplace pension and make a contribution towards it. Whether you are a barber, accountant or you employ a nanny, if you employ at least one person you are an employer and you have certain legal duties.
What do you need to do next?
Find out your staging date – this is the date that automatic enrolment duties come into effect for you.
What happens if you do not comply?
As an employer, you are responsible for meeting your legal duties. If you do not comply, you may face enforcement action including compliance notices and fines. If you do not pay the fines, the debt can be recovered through court action.
Do you know about the Apprenticeship Levy?
This comes into effect from April 2017. The levy will affect large organisations with an annual payroll of over 3 million. It will be payable by employers in the UK at the rate of 0.5% of the payroll cost through PAYE alongside income tax and national insurance. The government states that 98% of UK businesses will be exempt from the levy.
The 20,000 levy paying businesses will generate an estimated 3 billion a year. This can be reinvested into apprenticeship schemes.
Need a way to keep on top of all this legislation? Read on.
The practise of outsourcing allows you to focus on our business. Every business has limited resources, and every manager has limited time and attention. Outsourcing allows you to shift your focus towards work, which serves your customers and generates more income for your business.
When you outsource, you don’t have to worry about the following things.
Are you dealing with Inexperienced Staff?
Ignorance is no excuse. It’s the same with any aspect of your business, like HR, or Health & Safety. The payroll is only as good as the person inputting and maintaining the data. It is important that they have been trained in how to operate the system correctly. If you face charges from HMRC, most problems are down to human error.
Incorrect Tax Codes Being Applied & Failing To Keep And Backup Records
Tax codes can vary for a wide variety of reasons such as salary, bonus, benefits, student loans, past employment and seniority. Many companies use tax codes they are familiar with instead of checking on the HMRC portal or taking it from the employees P45.
There will be no sympathy from HMRC if you have failed to back up your payroll data. It is important that you keep your records for at least 6 years.
Wage queries are always to be discussed off site with managers only. If staff members are aware of how much someone is earning, this can cause disruption to the workplace.
- You also don’t have to worry about:
- Staff calling in sick on pay day
- Staff holidays over the payroll
- Possible maternity cover
- Keeping up to date and compliant with current legislation
- Payroll being accurate and delivered on time
Payroll is vitally important to your business. It may not directly increase sales but if carried out the wrong way, it can have major implications for your business both in time and money. With a little bit of time and planning, you can avoid common mistakes that other businesses’ make.
Why should I outsource Payroll to Wurkplace?
• Our payroll professionals have over 20 years of experience processing payrolls from one-man bands up to payrolls for 100+ employees.
• We process payroll for several different sectors throughout the UK.
• Wurkplace has been in business since 2012, and are a rapidly growing company that has recently moved to a larger office space to accommodate our growing business.
• Our software consists of desktop software that is constantly maintained and updated. We can offer a cloud-based service, which can be accessed by your managers for reporting purposes.
• We offer top quality customer support. You will be allocated one specialist as your main point of contact. You will be given their landline, mobile and email address so that you can contact them directly whenever you need to ask a quick question or need advice.
• The on boarding process is straightforward. Once you have signed up, we can usually have you up and operational within a week.
• We offer an integrate HR system that allows you access to ‘Tap In Tap Out’. This will assist you in tracking hours that have been worked by your employees. The system can also track staff attendance and staff holidays, which can be difficult to keep on top of.
• We can help you keep fully up to date with the ever-changing compliance issues such as auto enrolment and Real Time Information (RTI).
• We can set up reports that work for you and your business. They can be designed to assist your finance team so that less time is spent analysing out the wages. If you tell us what you require, we can build the reports around your needs.
The best time to switch payroll provider is the end of the Tax Year (April), but it is possible to change at any time of the year as required.
What information will be required?
This depends on your current provision. If you have a backup, this can help the process. If not, the type of information you would need is:
- Employee names
- Employee addresses
- Employee NI number
- Employee Tax code
- Employee total pay to date and total tax deducted to date
You would need to check with your current provider about cancellation fees, as this can sometimes catch people out. Our service is billed monthly in advance. You will need to determine if the cost of the service is worth the service provided. If you are trying to free up your time to concentrate on sales, this can be the ideal solution.
Payroll directly affects your employees, so it is important to the success of your company.
Payroll mistakes cost small businesses more than 700 million a year (information discovered by accountancy firm UHY Hacker Young). Don’t let your business become one of them.
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