Running a payroll for larger organisations with full time accounting staff is easy. Full time professionals are employed or the payroll function may be outsourced to a payroll bureau. For the small business the payroll task often falls to the proprietor demanding even more time to familiarise with current payroll legislation and a not insignificant amount of administration time that could be better spent making profits than number crunching. For small business organisations with five to ten employees calculating the income tax and national insurance contributions in producing the weekly payroll can easily take an hour or more each week. An hour that could be better spent earning profits or at the very least having an extra hour of free time each week. Free time that every small business owner value at a premium since the majority of small business owners either work or think about work from dawn to dusk 7 days a week. A payroll software package to satisfy the PAYE requirements can be just one part of making that small business more efficient.

Small businesses that fail to operate a sound payroll system can produce a negative effect on the employees. The pay an employee receives is expected, often spent or spoken for on receipt and provided the amount is a competitive rate would only rarely have an effect on staff relations. However operating a Payroll system that does not provide each employee with a payslip is like telling your employee he has received a personal letter that was opened for him and discarded as not important. To the employee a payslip is very important. And so important in that every employer has a legal responsibility to provide each employee with a payslip and at the end of each year a P60 End of Year Employees Certificate. A Payroll Software package will satisfy both the legal requirement and the employee requirements. Failure to provide employees with payslips can only reduce the respect hat employee has for his employer. Every employee must receive a payslip that shows the amount of income tax and national insurance deducted from the gross pay. Every employer must also calculate the employer national insurance contribution. Employers not using a payroll software package such as available from DIY Accounting Payroll Software must design their own payslip to give to employees to satisfy legal requirements.

In the UK producing a weekly or monthly payroll can be a burdensome task to comply with the HMCE requirements. HMCE provide much expertise advice in this area both via their website and each year through the distribution of the Employers CD-Rom. To fully appreciate all the technicalities and complete all the correct documents such as the P11 Deductions Working sheet is time consuming. It does not have to be a problem. Payroll Software can automate this knowledge and functions and is available at insignificant cost. The DIY Accounting Payroll Software package is available for five to twenty employees at a cost of 15 to 25 pounds. That is a payroll software package that could save a small business over an hour a week, for twenty employees more like two hours, for less than 50p per week. All small business owners should at least consider suitable efficient payroll software.

Many payroll software packages are written using databases and can put many small business owners off using them due to both the cost and the fear of the unknown complexity of using such a payroll package. Many payroll software packages written on a database provide an excellent solution but have a tendency to be extremely politically correct and cover all potential rules and regulations and consequently become more complex to operate as they can demand at least a minimum knowledge of the payroll system. There are other PAYE solutions. The DIY Accounting Payroll Software is written on excel spreadsheets requiring no payroll experience and a minimum of entries to produce all the essential calculations of income tax and employees and employers national insurance. In addition excel copies of the time consuming P11 Deductions working sheet, P60 Employees Certificate and the P35 Annual Employers Return are all automated to save the small business valuable administration time.

A significant advantage of a payroll software system written on excel is that it can also be used with an open office spreadsheet package but not least all the entries are visible and therefore transparent. Errors and mistakes can be easily corrected simply by changing the numbers on the payroll ensuring the payroll is produced both quickly and accurately. Payroll Software is an effective tool that should receive serious consideration by all small business proprietors.

Payroll Software also has the advantage because it can be simple and fast to use of avoiding late payments to the revenue and the consequent unwanted letters and potential fines this can invoke. By having all the information required for the monthly or quarterly revenue payments late penalties can be avoided and by producing the Annual Employers return on time small business owners can submit their returns online and receive a tax free online filing bonus. The current online foiling bonus being 150 pounds and substantially more than the payroll software might have cost.

Terry Cartwright qualified as a Chartered Management Accountant and Chartered Company Secretary in 1971. A successful business career followed as Head of Finance for major companies in the UK and several consultancy appointments. In 2006 he created DIY Accounting producing Accounting Software for self employed and small companies that use simple accounts spreadsheets to automate tax returns.

• 3 Comments

  

Comments

Nice post outlining things to be aware of when choosing a payroll system.

Elev8 Australia provide the software solution HR3 Payroll a highly scalable Client/Server database platform that can be deployed as a PC/LAN/WAN system for any sized company.

Improve productivity by reducing and streamlining time consuming tasks and requests. With HR3kiosk employees can access their information online, request leave, complete timesheets and much more.

 Posted by: Elev8 at March 4, 2009 4:54 AM

An effective payroll system is always a great solution to many problems for management as well as employees. We have witnessed many cases where many problems were solved because of right HR policies and / or payroll system was implemented.

Mark

 Posted by: Mark at July 16, 2009 12:20 PM

This payroll software systems seems to be a magic wand for all payroll needs. Am i right Terry?

 Posted by: Radhika at July 16, 2009 12:23 PM

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