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Business success is not just about driving sales and figures. In fact, in order to achieve success in business it is essential that employers implement the relevant legislation. This is where compliance comes into play. Employers are required to keep financial records and make deductions according to their legal obligations. If you’re running a start-up, or any limited company, keeping financial records is not just about keeping on the right side of the law; it’s keeping employees happy and informed. And this is good for business. Running a successful payroll system provides clarity to everyone involved. Here are five tips to help:
1 – Record all payments made to employees. All payments to employees have to be recorded even if employees earn less than £112.00 a week. Employees are also entitled to a payslip. All salary payslips have to include gross and net amounts, which in turn means that any salary deductions, such as tax and National Insurance contributions have to be calculated accurately. Once completed, the next step is to report pay and deductions to HMRC in Full Payment Submission (FPS).
2 –Employees records are essential. Make sure these are kept up to date and accurate. It is mandatory that details such as address, marital status and bank accounts be reviewed regularly. Failure to do that may result in a breach of compliance and result in a fine.
3 – Knowing relevant legislation is key. Are there any schemes or benefit packages that employees need to enrol in? For example, in the UK, since 2012 that automatic enrolment in a workplace pension has become mandatory. In other countries a pension scheme is optional. HMRC provides extensive information about employees’ schemes and contributions you and your employees are required to make.
4 – Once payslips are completed, and all the relevant information compiled, the next step is to report pay and deductions to HMRC in Full Payment Submission (FPS) or Employment Payment Summary (EPS) in the case you are reclaiming any statutory payments. Incorrect information may result in overpayments or, worse still, fines.
5 – Finally, a big part of getting payroll and compliance right is about choosing the right software system. This means working with an integrated system that can handle multiple operations. Some of the tasks involved include: assessment of workforce; postponement; calculation of pension contributions; opt-ins and joining; opt-outs and refunds; generating communications to staff; keeping records; operating with some or all pension scheme providers.