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Payroll Compliance Checklist 2022

As a business owner with employees, ensuring your workers are being paid properly is a top priority. Payroll can be a complex thing, and if you get it wrong, you could end up facing hefty penalties. To help make sure you get it right, we’ve put together a handy payroll compliance checklist for 2022.

With this in hand, you can be sure that your payroll is completely compliant with all relevant legislation and that your staff are being paid the right amount, on time.

2022 payroll compliance checklist

Payroll can be complex for several reasons, especially if you’re a new business owner, or if you’ve a lot of employees. Not only do you need to comply with payroll legislation relating to tax, but you need to ensure things like pensions and student loans are being deducted where applicable. Add to this frequent salary changes, especially for workers who get paid hourly, and it’s easy to see how it could quickly become a mess.

That being said, it doesn’t have to be. In just a few simple steps, you can get a grip on your payroll and balance the books, as we’ll explain.

1. Accurately record personal data

First thing’s first, you need to make sure the data you have on your employees is up to date. This seems basic, but you’d be surprised at how many companies get their payroll wrong because of incorrect employee data.

There are lots of things that can sway personal data, and if you have a large team, it’s easy for people to get overlooked. With this in mind, make a conscious effort to immediately record things such as:

· Promotions

· Maternity leave

· Sick pay

· Pay reviews

· Overtime

It might seem like a hassle at the time, but it will make your job infinitely easier when the time comes to run payroll.

2. Factor in workplace pensions

Whether you’ve one employee or 100, you are bound by the workplace pensions law introduced in 2012. This means you need to offer your employees the opportunity to pay into a pension scheme which you’ll match, but there’s more to it than that.

Some employees should be automatically enrolled, but they can opt out at any time. If the pension is decided on a pay percentage, there’s a high chance it will change from person to person, and this can make things slightly trickier in terms of payroll requirements.

If you’re confused, it’s a good idea to speak to the Pensions Regulator. They will be able to provide more information on the subject and detail how you can integrate your pension duties into your payroll.

3. Learn about international payroll legislation

Many UK businesses have offices and employees abroad, but those international employees are subject to a separate bout of legislation relating to their pay compared to their UK counterparts. Don’t make the common mistake of assuming UK payroll rules are universal – they’re not.

Always do your research regarding payroll tax compliance, exchange rates, deductions, wage laws, and record keeping – it will save you a headache in the long run!

4. Look into audit trails

There’s a lot at stake when it comes to dealing with payroll, especially in the way of protecting against fraud and monitoring how well your business is doing. Failure to organise yourself will result in vulnerabilities, and if you don’t have a record of what happened, any money that is lost may never be accounted for.

In addition, there’s every chance you could get audited by a regulating authority, in which case you’ll need to produce a paper trail – if you’ve one. To protect both yourself and your employees, it’s best to look into audit trails.

Most payroll software will offer it, but if you’re not using it yet, make sure you start.

5. Make sure you hit deadlines

It’s common knowledge that HMRC won’t hesitate to penalise you if you miss an important deadline. The problem is that there are so many, and most of them relate to payroll in some capacity. With this in mind, it’s important that you’re well versed on the topic of HMRC deadlines, otherwise, you risk compromising your payroll tax compliance.

Make a note of important dates such as tax deadlines and quarterly reports, and make sure you hit them every time. This includes handing out P60s to your employees on or before 31 May during your payroll year end.

6. Manage expenses effectively

Payroll can, as mentioned, fluctuate month on month depending on things like promotions, extended leave, and pay reviews, but another aspect that can impact your monthly payroll is expenses. It’s common for businesses to cover some of their employees’ expenses, but if you don’t set clear limits, you could find things get messy on the payroll. To avoid this, make sure you set clear boundaries with your employees on things that could impact their pay and any deductions that may be made.

Interested in learning more about business expenses and what’s included in the tax deductible bracket?

Read our School of Startups guide detailing everything you need to know about the complicated world of business expenses.

Download now

7. Keep up to date with new legislation

Payroll legislation changes frequently in line with things like minimum wage increases. With this in mind, make sure you make a conscious effort to keep on top of payroll laws that change or come into force. Like many business changes, they can fly under the radar, so they’re easy to miss, but doing so could land you in hot water.

Payroll support at Accountancy Cloud

Adhering to a payroll compliance checklist makes remaining in line with rules and regulations easier, but if you’re in doubt, it’s best to get professional support. At Accountancy Cloud, we’re a team of professional finance experts on hand to assist you with everything payroll related, ensuring you’re fully compliant and never miss another deadline.

Through the use of our integrated payroll software, you’ll find that your payroll process is far more streamlined and efficient, freeing up more time for your accounts team and maximising output. You can also keep an eye on your books in real time and rest assured that all your tax deadlines will be hit. Information is more accurate and easier to update, making automated payroll software the smarter choice for contemporary businesses who want to grow.

To find out more about our payroll software and how it could help your business, please contact us.

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