Payroll Management: Best Practice

Payroll management is the engine room behind everyone’s favourite thing, getting paid!

More specifically, payroll management is the process of managing employee pay, benefits, and deductions based on hours worked. Making sure your business’s payroll management runs smoothly is arguably one of the most important aspects of running a successful business.

So, in this blog, we’re going to break down the basics, help you choose an accompanying software, give you some tips to remain legally compliant, and show you how to optimise the whole process.

The Basics of Payroll Management

Why is payroll management so important? Because, if it’s not done correctly (or at all) your employees won’t get paid and you’ll lose all ability to retain them.

As we discussed in great detail in our human resources mega guide, without employees, your business cannot operate beyond what you alone can manage. No employees = no growth.

But it doesn’t stop there. Failing to pay your employees or give them the benefits agreed to in the employer contract can lead to legal issues.

An effective payroll team will manage the process of distributing employee salaries, as well as calculating their staff bonuses, and deductions within the business. Payroll management includes various tasks, including calculating employee compensation and ensuring staff are paid on time.

Choosing a Portal

Now, if you know us, you’ll know we love our tech, and when it comes to Payroll, it’s no exception.

When running a business, there’s a lot you have to deal with, and having instant access to all the files you need on one system can be a game changer.

Payroll portals help you streamline your payroll processes, saving you time and money. It automates the boring bits while reducing the chance of errors that can cause issues for you and your business.

For us, Brightpay is our go-to Payroll software that we use across our client base, and even for our own staff.

Why? Because of its impressive utility in any situation, one of Brightpays standout features is its flexibility. No matter what you need from your payroll software, Brightpay does just that. Everything, from helping business owners set up and run payroll for their employees, calculating taxes and deductions, generating payslips, and submitting information to HMRC.

BrightPay also provides automatic updates to ensure compliance with changing legislation and requirements.

Taking the busy work off your hands, Brightpay can allow business owners to get back to the good bits (running their business). Brightpay also minimises mistakes by removing human error through automation, so as you begin to spend more time back on your business you can feel safe knowing everything is being taken care of.

With the Brighpay portal employees can view their payslips, access P60s, submit timesheets, request leave, update personal details, and more. Meaning as a small business owner you can assign administrative tasks and empower your employees to manage their information efficiently.

Staying Legally Compliant

When it comes to anything in business, from accounting to tax, HR to payroll, there’s a certain level of legal compliance that needs to be followed, which is why in many cases it’s worth speaking to an expert.

However, with payroll especially, many laws must be followed to avoid heavy penalties.

We won’t go into every aspect of the UK legal system, as the list would be endless, instead, we’ll give you some general tips to stay on the right of the law.

Let’s start simple, if you plan on hiring employees, you need to make sure you register for PAYE first so HMRC can be aware of what you’re paying this employee and how much they need to tax them. Failing to do this will incur monthly penalties until you have registered, so make sure you do this first to get ahead of any issues.

Our next tip is to make sure you’re keeping track of what you owe your employees and what your employees are earning for the hours they work. A failure or miscalculation can mean paying staff under the minimum wage, which again, can cause heavy penalties and your name on the HMRC name and shame list.

Lastly, you need to keep an accurate record of your employee’s data and keep on top of paying HMRC the right amount at the right time. Because if you don’t, guess what happens next? You guessed it! Heavy fines and penalties.

In short, to keep your payroll legally compliant you must keep on top of the latest changes to key information (such as minimum wage) to keep your payroll running like a well-oiled machine

Running Payroll Management Smoothly

So, now you’re ready for payroll management, and hopefully, you understand the vital role it plays in keeping your business running in tip-top shape. Let’s look at how we can get everything running as smoothly as possible.

But first things first, the cheesy sales pitch: A recommendation off the bat is that you outsource your payroll to us!

Outsourcing gives you access to a large team of professional payrollers for a fraction of the price of doing it yourself. Outsourced payroll also scales with you so if you see a period of massive growth, you don’t have to worry about hiring more staff.

If you do decide to go it alone, we recommend you first get your software sorted.  Next, get your process set up. By developing standard procedures you can minimise mistakes and slowly master your payroll overtime.

With all the tax implications on salaries and benefits, we also recommend you keep some cash handy in case HMRC come knocking. Additionally, with proper tax planning, you can ensure there will be no nasty surprises, talk to our team if you need help getting set up with an effective tax plan.

Lastly, make sure you’re always swotted up on the latest changes to payroll policies, from there you can adapt your standardised procedures to accommodate these changes.

Wrapping up

In conclusion, effective payroll management is essential for the success of any business.

It ensures employees are paid accurately and on time, which is vital for retention and legal compliance. Leveraging reliable payroll software like Brightpay can streamline processes, minimise errors, and automate administrative tasks, freeing up valuable time for business owners.

And if you don’t want to go it alone staying informed about legal requirements and considering payroll outsourcing can further enhance your business’s efficiency and compliance.

By adopting these best practices, businesses can optimise payroll management, focus on growth, and avoid costly legal issues.

Get in touch with our team for a free consultation if you want to learn more about outsourcing your payroll and following these best practices.