Mastering Payroll: 5 Key Tips for Success

If you own a business and employ employees, then you know how important managing payroll is. Managing payroll is very extensive: it ranges from processing salaries and bonuses to ensuring your employees are paid on time, while also ensuring you comply with laws and regulations such as the Payroll System (PAYE ) retain.

Due to budget constraints, small and medium-sized businesses (SMEs) have to manage their own payroll, unlike large and established companies that have their own payroll department to help them do this.

In this post, we present 5 tips to help you successfully manage payroll for your company.

1. Maintain accurate employee records

It may seem obvious, but it is vitally important that you have the correct personal information for each employee. If this information changes (e.g. a promotion or raise after a salary review) or is not entered correctly when the employee is hired, it could lead to legal issues. It is your job to record your employees’ data for the duration of their employment.

Some information, such as date of birth and social security number, is unlikely to change. But employees move, get married (and sometimes change their names as a result), update their beneficiaries, change banks, and take sick leave or disability. Some companies also record pension contributions. All of this needs to be reconciled and kept up to date.

This also means that in the event of illness, maternity leave or termination, you know who will receive benefits and what their entitlements are. While it may seem tedious, maintaining and updating your employees' HR information is one of the most important tasks of your payroll team.

2. Comply with payroll regulations

Another important aspect of payroll is the General Data Protection Regulation (UK GDPR). The UK GDPR currently applies to all UK companies that process personal data, or to companies outside the UK that sell to people in the UK or monitor the behavior of people in the UK.

Much of the GDPR concerns what data you can collect and retain from your customers and your obligations in notifying those customers. However, the General Data Protection Regulation also has an impact on human resources. It regulates what data you may collect about your employees and provides guidelines on how you must inform them about this collection.

The General Data Protection Regulation also regulates how and where you can store private information. Most payroll programs take this into account and ensure that the collection and storage of employee data is consistent with this and other data protection regulations.

In addition to the GDPR, there are numerous other regulations that you need to keep an eye on. If you run your payroll in-house, your team needs to be aware of upcoming changes to these regulations and when they come into effect. For example, the recent changes to IR35. Not only do you need to adjust your payroll accordingly, but you also need to inform your employees about the changes.

3. Automate your payroll

Manually managing payroll can be tedious, very time-consuming and prone to errors. An affordable solution for SMBs is to automate payroll by purchasing payroll software. Fortunately, there are a wide range of cost-effective solutions on the market, including cloud monthly payroll software.

Factors to consider when choosing payroll software for your business include the size of your business, the level of technical support you need, whether your employees are paid hourly or on a commission basis, and which functions are non-negotiable.

For example, if you pay bonuses, commissions or overtime, you should choose a system that can be customized. On the other hand, if your payroll is predictable, you should choose software that offers automated rules and scheduling.

Other features to consider include: the ability to automatically enroll employees into a pension system, integration with other systems such as: Such as accounting software, customizable reports, accessibility across multiple devices, a self-service employee portal (delegates routine tasks to employees, such as submitting timesheets and expenses), and automatically generated payslips.

The best thing about these solutions is that they make it easy to update your payroll database so you don't have to manually enter each employee's wages and deductions. They take the work off your hands by automatically calculating what should be deducted from each paycheck, saving you valuable time.

4. Be transparent about payroll

Your employees value transparency. They want to know when they will be paid, when they must submit their timesheets, and what the company's wage and salary policy entails. The great thing about implementing cloud-based payroll software is that most have a payroll calendar. Not only does this show employees when they will be paid and when timesheets are due, but it also helps your payroll department plan payroll tasks.

Some payroll programs will even automatically create a calendar for you once your payroll schedule is set. An effective payroll calendar makes the payroll schedule, including vacation pay, transparent so employees are not in the dark about when and how much they will be paid at any time of the year.

If your company pays bonuses or other benefits, you should be transparent about when they will be paid (e.g. after a performance review) and how they will be paid (e.g. in addition to the employee's existing salary, as a lump sum).

5. Regular review of wage and salary policies

No matter how confident you are in your current policies, it's important to keep them up to date. As laws and software change and your business grows, older policies may need to be changed or replaced.

Have your payroll team document questions asked by employees. If you frequently receive the same questions, you should review and update your payroll documents and onboarding process.

Likewise, if you don't use a cloud version, you should test your payroll software after each update. This is especially important if your software is integrated with other parts of your business, such as: with biometric or card-based access systems that monitor when your employees are working.

Ultimately, every company at some point is faced with the question of whether it should outsource payroll accounting to a specific company. While this may add additional costs, it simplifies a large part of the process. Payroll and accounting companies are experts in compliance and know what software to use for a business of your type and size. Small businesses should also consider outsourcing payroll when faced with complex situations, such as: with employees in different countries.

Finally, employees should know who to contact if they have questions about payroll, such as: E.g. on company policies, timesheet submission, pension, etc. Never assume that your employees understand all aspects of payroll. So make sure you open the lines of communication and are prepared for feedback from your employees about what is working and what areas need improvement.

In conclusion, mastering payroll is essential for business stability. Accurate record-keeping, regulatory compliance, automation, transparency, and periodic policy reviews are key pillars for success. IceHrm offers a strategic solution for businesses seeking efficient and compliant payroll processes, ensuring a smooth path to sustained growth and operational excellence.