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Creating a Payroll Roll System

By: Rachel Newcombe - Updated: 16 Oct 2012 | comments*Discuss
Payroll Tax Salary Small Business

If you’ve got employees working for you, it’s crucial that you have all the necessary information about your staff and pay them correctly and on time. In order to keep this process flowing well, and ensure staff are happy, you need an efficient payroll system.

When you employee people to work for your business, it’s up to you to keep up-to-date and accurate records detailing your employees name, details of all payments you make to them, information about all deductions made for income tax, student loans or National Insurance contributions, and full details of all your employees National Insurance contributions (NI).

The records you keep with all this information on, and the system you use to calculate PAYE and National Insurance contributions, is collectively called the payroll. Every time you have a new employee, it’s essential to record these details and set up a new payroll record for them. As an employer, it’s your legal responsibility to deduct PAYE and NI from your employees salaries and pay them to HM Revenue and Customs.

Payroll Options

There are several different ways to go about creating a payroll system. When you’re a new small business and new to having employees, it’s a good idea to explore the different options available and consider which will work best for your business needs. The three main ways of creating and running a payroll system include:

Using a payroll service. This is way you employ the services of a specialist payroll company, who sort out all the records for you and do all the essential payment, PAYE and NI calculations, plus handle all the paperwork. This can work out as a good choice if you’re a large company or if you’re not sure of handling it yourself.

Using a manual payroll system. If you don’t mind handling paperwork yourself, you can keep written records of all your employee’s key information and calculate the NI and PAYE contributions yourself. This is how payrolls tended to traditionally be worked.

Using computerised payroll software. The third main way of creating a payroll system is to use specialised computer software to do all the hard work for you. The software is designed to handle all the information you need and will automatically calculate the PAYE and NI contributions.

A variety of companies produce such software, with many offering free trials to interested businesses, so you can test out the software, see how it works and whether you find it easy, before you commit to purchasing the product.

Using a Payroll System for the First Time

When you’re starting a new small business for the first time, all the new tasks you have to do can seem a bit bewildering. If you’re concerned about the idea of getting to grips with a payroll system too, don’t panic.

A New Employer’s Starter Park is available from HM Revenue and Customs and this will help you know what you need to include in your payroll and how to do the calculations. The pack includes details of the current PAYE and National Insurance rates and provides step-by-step information on working out the deductions.

You’ll also receive a Deductions Working Sheet, otherwise known as P11, which you can use to record information about the deductions for each employee if you wish, or you can use it as a basis for creating your own record sheet. If you’re still uncertain about anything, then help is always at hand via a special HMRC New Employer Helpline.

Once your system is up and running, you’ll soon be paying each employees salary quickly and efficiently each month.

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