Manually working out all the payroll calculations for your employees can be time consuming task. Payroll software can do the calculations instantly....
Why Use Payroll Software in Your Business?
Wages represent one of the largest operating expenses for small employers. Therefore, the wages bill needs to be carefully managed to minimise its impact on company profitability. One of the most significant operational tasks of any employer, is to track payroll and future company taxation liabilities. To reduce this administrative cost and hassle, payroll software can be used to automatically calculate employees wages. Accurate payslips can then be produced to meet payroll deadlines. Most small business payroll software, can also transpose employee data into accounting software. In addition, most can export data into statutory forms for online submissions. Generally speaking, the more complicated a firms working practices, the more relevant a payroll program becomes in helping to manage the wage bill. These working practices may include:- Flexible working hours
All these factors influence the payroll services system (which must be kept up to date and accurate at all times). Not all small businesses are large enough to justify buying a payroll software program. Many can get by just using the HMRC free tools.
Core Functionality of Payroll Software
Manually working out all the calculations for your employees can be time consuming task. Payroll software can do the calculations instantly. Payroll software calculates deductions so payslips can be produced, that determine national insurance, income tax, company benefits, tax codes, and so on. Some packages will also handle the physical payroll by facilitating BACS payments or the production of cheques. It makes the administration part of payroll, much simpler and easier to operate. In addition, it helps the business remain compliant with the current tax rules and procedures. Most software can be installed, to track weekly or monthly salary intervals, work absences, overtime and statutory sick pay. In addition, most applications also have the ability to prompt the administrator, with automated calendar deadline reminders during key points in the tax year.
Keeping Employee Records
Payroll software simplifies the administration process, when employees join or leave your company. Most programs prompt the supervisor to complete all the necessary statutory data fields required. Most payroll systems can also handle ongoing changes in personnel circumstances, (such as promotions, pay rises, a pregnancy or sabbatical). These changes in circumstances will probably mean change in their tax code. As a result, your wage bill will change and cash flow is affected. The program can also save more detailed personnel information that is not shown on the payslip. For instance, contact details, previous employment history, job status, disciplinary records, academic qualifications, training records, references and annual leave and absences can all be stored.
Tracking Employee Productivity
Payroll software can also help you keep track of your staff's activities and accurately pay them accordingly. This means that any time sheet record keeping will need to be transposed into your payroll software system at some point. Keying in this information is a painless task of filling in the blanks. Most payroll software programs can create a series of summary reports, showing employee productivity from timekeeping data. The software can also help the holiday planning process, and manage unplanned absences. This helps track how valuable your employees are. This data helps you to ensure your company is compliant with the Working Time Regulations Directive and the National Minimum Wage Legislation.
Keeping up with Tax Deadlines
Payroll software can also speed up end of year bookkeeping reconciliation and employer reporting. These includes issuing and submitting P11D and P60 to employees (to help with their tax returns), and the P35 and P14 to the HMRC. To buy HMRC approved software usually involves an upfront cost, as well as an annual maintenance fee for updates. These regular updates are as critical as buying the original software license, because of the changing nature of the tax system. Occasionally, the taxman will change the accounting compliance requirements and tax rates. So employers must comply with all the latest deadlines for form submissions.
Protecting Payroll Data
Most programs have the functionality to perform backups and restores. This is fundamental both to meet the Data Protection Act but also in case of a technical disaster. If your payroll data is accidentally lost (due to system corruption or other unforeseen events) your ability to restore the data from backups is critical. Failure to do so may result in heavy fines due to the inability to submit accurate accounting and tax data to the authorities. Lastly, if you are considering moving from a manual process to automated software one, you will need at least two people to oversee the payroll process. Generally speaking, an administrator will be in charge of day-to-day maintenance of the application, and a more senior manager will sign off and authorise the payroll run.
Good luck with buying your payroll software application for your business!