1. Ensure that you are registered as an employer with your PAYE tax office and have received basic information and PAYE forms.
2. Decide who will be responsible for managing PAYE; consider whether to use the services of a payroll agency or your accountant.
3. Invest in appropriate payroll software: consider how it could be linked into your accounting system.
4. Set up a payroll timetable: include the dates for making payments to employees, the Inland Revenue, and handling year-end PAYE filings and employee documents.
5. Clarify the legal rules, and your contractual agreements, covering sick and maternity pay, pension contributions and deductions from pay.
6. Establish a system for dealing with new employees, employees leaving, sickness and maternity leave.
7. Implement a system for calculating additional pay (eg bonuses and commission) and any taxable perks (eg company cars).
8. Decide how expenses will be handled.
9. Put in place security measures to protect the confidentiality of payroll information and guard against fraud.
10. Make contingency plans (eg if your computer system fails) to allow you to handle payroll and filings on time.
11. Use your payroll system to generate useful management information (eg employee costs, individual employees records).
12. Keep up to date with payroll rules by reading Inland Revenue mailings; if necessary, contact the employers’ helpline or your professional adviser.
Do's & Don'ts
Do:
Use payroll software.
Timetable key payroll events.
Produce useful management information.
Make contingency plans.
Don’t:
File or pay late.
Forget to record taxable benefits.
Ignore updates to PAYE rules and procedures.
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