If you own a small business and haven’t already set up a payroll system, then you may be looking to do so. Listed below are 9 steps to help you set up the right system for your business needs:
- The first step is to decide whether you manage it yourself, or hire a payroll service provider. A good software package can make payroll relatively simple, but you may find that the peace of mind you’re afforded when outsourcing this instead, is worth more to you. You may not have the time or the understanding to get the best out of a software package, and a payroll service provider can alleviate that pressure.
- Find a system that is easy to use and works well for you. Your payroll system software must allow you to work on it from anywhere and at any time, should be simple to use and allow you to share necessary data with others, like your accountant for example.
- Ensure that your chosen system can process the relevant information. A good payroll system should be able to process employment documentation along with the full relevant details of each member of staff, their bank account details, salaries, tax codes and returns, benefits, pensions, sick days and holidays, maternity and paternity leave.
- Make sure that the system complies with legislation. Employment and payment legislation must be complied with in order to avoid audits and costly fines; find out what the minimum wage rules are and the requirements for end of year reporting.
- Accurate records are essential. Even the smallest of errors in your records can result in expenses you could do without; a good payroll system will help you with this as it will automate a lot of the work.
- Choose how you want your staff to be paid. Most employees are paid on a weekly, fortnightly or monthly basis and your payroll system will need to be able to cope with this.
- Set up reminders for payments and tax filing. Staff payment reports are government requirements and can be requested quarterly or yearly, although sometimes each payment will have to be reported as it’s made. You can set up reminders in your payroll system to make sure you never miss one.
- Arrange direct bank payments for your employees. Nothing is more stressful and upsetting for employees than to not receive their wages on time, so it’s essential that you set up scheduled payments; a good payroll system will allow you to make payments to your staff straight from your business bank account.
- Find out how long you have to keep employment records for. A common legal requirement is that you must keep employment records for six years, but it’s advised to check local state laws for this.