As an employer, one of your many tasks is paying your employees each month. You need to make sure every team member is compensated for their hard work.
Figuring out a great payroll system isn’t always the easiest thing to do. There are several ways to establish a payment system and finding the best one for your business can be tough.
Payroll isn’t the most exciting subject but it’s one of the most important, whether you’re the owner of a small or large company. Getting your wages wrong is inconvenient for both you and your employees. It can also lead to a range of issues with the authorities, some of which can involve hefty fines.
Consistently getting your payments wrong might encourage an employee to take legal action against you. Employees can hire wage dispute lawyers to file a claim against you and you might end up fighting your case in court, which is both costly and time-consuming.
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What Does Payroll Involve as an Employer?
Paying your employees doesn’t just involve adding up hours worked and figuring out the total wage. It requires you to have an understanding of employment laws and taxes too. Every good business owner establishes a great payroll system that encompasses every aspect of paying wages, such as gross income, net income, and tax breakdowns.
You need to calculate your employee’s wages based on their contracts. If you have multiple levels of employment, each with different hourly wages or annual salaries, you need to make sure that each staff member is paid according to their right role.
Next, you need to calculate any wage deductions, such as pension packages, student loan repayments, and national insurance payments.
Automating Your Wage Payments
You can now automate the invoicing and payment processes by using a payroll software. Automation can save time and energy each month, and you can minimize the risk of payment errors.
You can choose to input each of your employee’s total hours of work yourself to produce an automated bank transfer into their accounts each month. Alternatively, you can get software that has the option to upload your staff rota onto the system to produce automated payslips.
Creating Your Employee’s Payslips
Regardless of whether you decide to use automation software or you’d rather do the maths yourself, you will need to produce payslips for each employee. The payslips can either be given to employees physically or sent digitally via email or an online wage system.
Payslips must include the following things:
- The employee’s full name and payroll number
- The amount of money that the employee has earned before deductions (known as the gross wage)
- The total amount of deductions and a breakdown of each deduction, such as taxes, pension payments, or insurance expenses
- The amount of money that is being paid into their bank account after deductions (known as the net wage)
