Take the strain out of paying

By Ewan Turney

- Last updated on GMT

Related tags: Hmrc

A fist clenching money
A fist clenching money
Paying staff on time and the right amount needn't be tricky and time-consuming, says Ewan Turney - just choose the right method: Set up as an...

Paying staff on time and the right amount needn't be tricky and time-consuming, says Ewan Turney - just choose the right method:

Set up as an employer - If you are new to the game you need to register as an employer with HM Revenue and Customs (HMRC). This can be done either by phone or email - to register via email log on to the HMRC website (www.hmrc.gov.uk) and follow the instructions. While you're on the site download the Prospective Employer Pack, which will tell you pretty much everything you need to know about taking on your first employee.

Register as an employer via email - www.hmrc.gov.uk/employers/new-emp-email.htm

Download Prospective Employer Pack - www.hmrc.gov.uk/employers/prospective_emppack.pdf

New Employer helpline - 0845 60 70 143

2 Manually - If you are a small enough employer, have the capacity for great attention to detail, and have enough patience and time, you can do your payroll manually. Within two days of registering as an employer you will be sent a New Employer's Starter Pack from HMRC, which will help you tell your P45s from your P60s. The pack includes a P11 sheet to record employee details and deductions.

The best thing about doing payroll manually is that it doesn't cost you anything. The worst part is, as payday approaches, you need to spend a fair few hours calculating deductions, double-checking them and producing your own payslips. It could fast become a nightmare once you

start processing tax credits, maternity pay,

pensions and student loan deductions. Do you have enough time? After all, your job is supposed to be running the pub and the last thing you want is not to get the wages out on time. What's the worst that can happen? Well, maybe your staff won't turn up.

3 Software - A software package will help slash time and effort. A decent one should calculate deductions, produce payslips, work out holiday pay and produce the summary reports and figures that you will need for the end of the year with the minimum of effort.

You need to make sure it is officially approved by HMRC and has a Payroll Standard logo. A package, such as Sage, should cost around £650 including maintenance cover, and might well come with a training course, which can be highly beneficial. Ultimately, it will be worth the extra money taking a day out if it means you understand more about payroll and get the most out of your package. The provider should send you software updates as and when necessary, for example when a tax rate changes, and it is vital to install these to ensure calculations are carried out properly and accurately.

Accredited payroll packages - www.hmrc.gov.uk/ebu/acclist.htm

4 Outsource - Payroll is a highly labour-intensive exercise. It is essentially an administrative process that takes up valuable time that could be better spent running your business and improving your bottom-line profits. Outsourcing a low-impact process such as payroll to established professionals such as accountants and payroll agencies might be a good way to free up some time. Although it is another cost for your business, savings can be made, especially for multiple lessees. Outsourcing to professionals will take the risk out of the process as teams are dedicated to making sure your payroll is done on time.

5 Accountant - Most accountants offer a payroll service. It might make sense to ask yours if they can provide payroll services as they will already be familiar with your business and might offer a competitive rate as part of a package. Accountants will keep PAYE paperwork safe, provide staff with payslips and ensure monthly and annual returns are up to date, and using one is a good option for licensees

with one or a small number of pubs. Make sure they are members of the Institute of Chartered Accountants and preferably find a licensed trade specialist.

Accredited accountants - www.icaewfirms.co.uk

6 Payroll agency - While some businesses might consider payroll too sensitive an issue to be handed to someone outside their own accountant, payroll agencies can offer additional benefits. They have teams dedicated to payroll and can answer questions and queries quickly. Agencies will invariably provide internet access 24-hours a day and can tailor packages to suit. They tend to deal with multiple operators, five sites and up, but many are looking to develop systems for individual licensees. The process can add discipline, ie make sure payroll details are in on time from managers, and provide a full audit trail. Typically, they charge by the payslip produced. Outsourcing to an agency is not for everyone - if your payroll takes you 20 minutes, then there is no need.

7 Considerations - If you choose to outsource you can specify the level of involvement you want from the provider. You might want to outsource the whole payroll or simply have them provide your payslips. Before handing over your payroll you need to consider the following:

Can they tailor a suitable package?

Are they experienced in the licensed trade?

Can they supply monthly payslips, and provide monthly and annual returns?

What do they charge and how?

Is their software HMRC accredited and compatible with your own?

8 Contracts - To make the most of outsourcing you need to make sure that contracts are carefully written. You need to:

Specify they will calculate tax and deductions accurately, given the information supplied

State they will make deductions to your specific timescales

Agree they will ensure mandatory paperwork (eg P60s, P45s, P11Ds) is completed within the regulatory timescale

Stipulate that if they fail to complete the paperwork in time, provision is made to reimburse you for any penalties

Specify that they will keep the necessary records of any taxes and deductions as required by HMRC

Make sure they specify any additional charges you might incur

9 Internet - An important point to remember is that all licensees should be aiming to file tax returns and PAYE online as it has cash benefits (£250). Make sure any software package you take allows you to do this easily, which is also something worth considering when outsourcing to accountants and agencies. There should be no problems but it's worth making sure. It will be compulsory to file

online in 2005-6 if you have between 50 and 250 employees and all employers will have to do so from 2009-10.

10 Problems and mistakes - If you go manual, choose software or even outsource, help is always at hand. The BII or Federation of Small Businesses have legal and employment helplines that are worth the membership fee alone.

The Business Link website also has a number of useful guides to help ease the process as does the HMRC website and helpline. If for some reason mistakes on the payroll have been made, contact your local HMRC office for advice or get your payroll provider to do so. To find your local Inland Revenue office visit the link below and enter your postcode.

l Find your local Inland Revenue office - www.hmrc.gov.uk/enq/main.htm

l BII - www.bii.org

l FSB - www.fsb.org.uk

l Business Link - www.businesslink.gov.uk​.

Free audit offer

Ciber UK has provided payroll services for a number of major players in the industry including Yates and Tattershall Castle Group. Business development manager Colin Charlton is offering five MA readers the opportunity to receive a free confidential and no-obligation audit to gauge whether they could benefit from outsourcing payroll. If you are interes

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