The essence of running a payroll scheme for a company is to correctly account for amounts paid to employees and to make payment at the appropriate time for the PAYE and national insurance deductions.
In addition, employers are obligated to maintain adequate records which depict how the relevant figures were arrived at.
Options for Maintaining a Payroll Scheme
There are a number of options which are available to businesses in order for them to run their payroll system.
Some of these facilities include:
Operating an In-house Payroll System
Some companies might choose to keep their payroll operations in-house because they view this as the less expensive option.
Keeping this function inside the company might also provide the company with greater flexibility as to when the payroll is run and how payments are made to employees.
Companies with an inherently high staff turnover might find the costs charged by external agencies for setting up and removing staff prohibitive.
There might also be relevant expertise and capacity for current staff to prepare the salaries of the employees, particular if the same persons or department also handle the company’s accounting and bookkeeping functions.
Computerise payroll packages often allow persons without detailed knowledge or experience in the PAYE and NI field to carry out accurate and timely salary calculations.
An example of a relevant software package is Sage Instant Payroll which costs less than £120. The emphasis on using such a computerised system is perhaps more on being able to use a computer than it is on being able to understand the basics of running a payroll scheme.
Use an External Payroll Bureau
The alternative to an in-house system is to use a payroll bureau to set up and operate this function on behalf of the company.
This option has the potential advantages of not requiring the company to employ administrative staff to run the system.
They can also utilise the knowledge and expertise of the external resource to ensure that payments to employees and to Revenue and Customs occur in an organised manner.
Using an external payroll bureau could be expensive in cases where the company has many leavers and joiners or where wages are calculated and paid weekly.
Payroll re-runs might also give rise to additional charges.
