Payroll accounting can seem like a bit of a headache, even though taking on employees is a sure sign of business success. Once you start paying other people there’s a lot to deal with – keeping on top of all the changes in tax, employment law and regulatory issues is a complex and time-consuming task. Year-end becomes a minefield with HMRC knocking on your door for tax returns, alongside the race for P60s. And as you can imagine, it’s a breeding ground for transcription errors and miscalculations.
So, this is where payroll software comes into its own.
Who needs Payroll software?
The simple answer is anyone with employees, or who pays themselves as an employee. Since HMRC introduced Real Time Information (RTI) reporting, employers have to submit PAYE information through compatible software, every time they pay their employees. This Full Payment Submission needs to happen on or before the day the employee is paid through HMRC online services. Even if your employees don’t need to be registered with HMRC (because they earn less than £118/week) you’ll need to keep records for them. Payroll software is the best way to do this as it knows what you need to know – read on and find out why it’s the way forward.
QUICK TIP: Before you submit any information to HMRC you need to register for a Government Gateway account and enrol for the PAYE for Employers.
What does payroll software do?
In a nutshell, payroll software will ensure you pay your staff the right amount at the right time. And that’s crucial in holding onto your staff – happy staff means they’ll stick around for longer, which improves your bottom line as well.
But, astonishingly, according to CIPP’s report, The Future of Payroll 2019, only 25% of businesses they surveyed were using cloud-based payroll software. So here are a few reasons why you should go for it.
6 key benefits of payroll software
You’ll save time
Payroll accounting software such as QuickBooks takes the number crunching out of the process, leaving your payroll administrator to oversee everything. Income tax deductions and National Insurance Contributions (NICs) will all be worked out for you. It can also track absences, expenses, bonuses, holiday pay, overtime, pensions and (of course) hourly pay or salaries. And with the advent of open banking and psd2, payments are faster than ever (and more secure).
You’ll stay compliant
Staying up-to-date with current tax rates can feel like a constant game of catch-up. But there’s no need to worry with payroll software. It tracks all the latest regulations automatically, dealing with issues from GDPR to Workplace Pensions (auto enrolment) as well.
You’ll improve accuracy
As with all aspects of your business, manual data entry means the risk of human error and potentially costly mistakes. Under-deductions, late payments, miscalculations – they’re all part and parcel of manual entry. We’ve done it: hit the space bar mid-spreadsheet on Excel and deleted a formula without even noticing later on. When all the number crunching is handled by your payroll software, that risk is removed. You’ll actually be on top of your record keeping, so it’s much easier to meet your deadlines and make those payments to HMRC in plenty of time. Especially with a built-in reminder.
Your employees will benefit
Some payroll software offers employees access to their own portal. This gives them restricted access to the system and allows them to check details, take a look at their payment history and even book time off.
It sorts your stationery
Employers are required to give each employee a payslip with the details of their pay and any deductions. Make sure the payroll software you choose lets you produce smart (ideally customisable), secure and compliant payslips that can be printed or emailed as well as P60s and payroll reports.
It’ll make your year-end easier
Automatic tracking, recording and reporting is offered as part of most payroll software. These features make the year end far less stressful for you or your payroll manager – gone are the days of paperwork mountains.
And there’s an added bonus…
It could save you a lot of money in penalties. Payroll places extremely high levels of responsibility on employers, and getting it wrong could potentially be very painful.
Which software is right for you?
If you have fewer than 10 employees you can use HMRC-recognised free payroll software to report PAYE information online in real time (RTI), but this may not help with Workplace Pensions. Larger businesses or those looking for additional functionality will need to use paid-for software that’s recognised by HMRC. To get the most out of your payroll software, choose a system like QuickBooks that can support:
payments and deductions including NIC, pension contributions, student loans and statutory payments (sick, maternity, paternity, adoption and shared parental)
Workplace Pension (auto enrolment) schemes such as Smart Pension, NEST and People’s Pensions, assessing employees, creating communications managing contributions
a variety of payment runs, such as weekly or monthly
error corrections, including editing multiple employees and pay periods at one time
full integration with other systems like your business accounts, to help reveal business insights. It’s the only way to ensure maximum time management, reliability and accuracy.
QUICK TIP: Make sure the software you choose offers a step-by-step guide to getting set up and offers good support if you’re unsure about anything.
QuickBooks payroll software
QuickBooks offers a choice of secure payroll accounting solutions. QuickBooks Online Payroll supports smaller, simple payrolls. For more advanced payrolls, QuickBooks Online Advanced Payroll is now in beta, and find out more about it here.
Be sure to compare the functionality of each product before you choose the best one for your business. Prices start from £1 per employee per month.
It makes sense to simplify your payroll – you’ll be glad of this when it comes to year end. And with more time on your hands, you can concentrate on what really matters - growing your business.
We hope you’ve found this article useful. Find out more about how QuickBooks’ payroll solutions could help streamline the way you pay your employees and stay compliant.