What is a monthly payroll?
In a nutshell, a monthly payroll means that your employees get paid monthly on a date that you specify in the employment contract.
This might seem like an obvious answer, but there’s a lot more to payroll than meets the eye! Not only is payroll the list of company employees, but it also outlines the amount of money that’s due to be paid to each employee. This includes salaries, bonuses, wages, commission and statutory payments.
Payroll is extremely important, and the policies and procedures outlined by HMRC must be adhered to within the dates that it provides. We know it can be quite overwhelming to keep on top of payroll, but don’t worry. We’ve collated the need-to-know information about administering a monthly payroll, including why outsourcing it might be the best thing for you and your business!
What are the benefits of having a monthly payroll?
There are advantages to having a monthly payroll instead of a weekly or quarterly payroll. For example, a monthly payroll is often better suited for employees. Hardly anybody will be happy waiting until the end of every quarter to get paid, yet being paid every week is sometimes too often! People would generally prefer one lump sum at the end of the month. The most important thing is that the payment terms are outlined in the employment contract.
By issuing a monthly payroll, you’ll also have enough time between paydays to organise your payments to HMRC and your employees. You might struggle to do this if you issue the payroll on a weekly basis.
In contrast to this, a quarterly payroll could provide too much time between payrolls, which could lead to lost information, uneven cash flows, and a lot of panic and stress for you! For the vast majority of cases, monthly payroll remains the best option.
How do I setup a monthly payroll?
If you decide to administer your own payroll, you need to take the following steps:
- Register yourself as an employer with HMRC which will give you a login for PAYE online. By being PAYE registered, your employees will have their income tax and national insurance contributions deducted before it gets to their bank account.
- Choose payroll software that can record all your employee’s details, including their salary and any deductions that need to be made. The software should ideally produce payslips for your employees as well.
- You must collect and keep all records and information of every employee and notify HMRC of any changes – whether that be an employee leaving the company, joining the company, or changing their annual salary.
- All of the information and payments that are recorded in your online payroll software should be provided to HMRC prior to the first payday.
- You should then arrange to pay HMRC any tax or NICs that you owe. The HMRC tax month runs from the 6th of one month the 5th of the next.
Sounds complicated, right? It doesn’t have to be! Keep reading to find out how we can help.
Have you thought about outsourcing your payroll?
As you can probably tell, administering your own payroll can be a tedious and time-consuming task, not to mention that payroll software is often quite pricey. We know there are better ways for you to spend your time and money. By outsourcing your payroll, you’re saving yourself the stress of making mistakes and freeing up time to focus on running your business.
