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Why You Should Invest in Payroll Software

Payroll can be one of the most challenging and time-consuming elements of running a business, if you hire employees. It is a legal obligation to correctly keep track of the work carried out by employees and to make sure they are paid accordingly. As a small business owner, you might have to manually carry out payroll duties yourself until you can afford to have an HR department who would then take over. 

Alternatively, you could let payroll software do the hard work for you. So which Payroll Software is best? There are lots of options so make sure you read some reviews before investing. But until you’re able to invest, just follow this simple guide to get an overview of what’s involved.


You need to keep a constant track and record of exactly how many hours every member of staff has spent working, this includes the time they’ve spent in different roles if this effects their pay. You’ll need to know how many days they’ve had off and whether this was paid holiday or unpaid sick leave for example, and any breaks they’ve had during each day, paid or unpaid.

As well as the standard pay, they receive for the hours they have worked, whether it’s hourly pay or salaried, you will also need to know how much commission and bonus they have earned, if you offer this. You need to be extremely accurate when calculating the total and state on the payslip exactly how much is assigned to each form of income, and the timings associated with them.


As well as earnings, you will need to accurately calculate a number of deductions too. Most employees have to pay tax on their earnings, and each individual has a different tax code depending on their personal circumstances. You will need to ask them for their tax code when the begin working for you. National Insurance is another obligatory deduction.

Then there are the deductions that some choose to pay, for example if they are contributing to a pension scheme, of if you offer a medical benefits package that they’re happy to pay towards. If they have been to university and earn over a certain amount, they might have to pay back a student loan too. Just like with their earnings, you will have to clearly state each deduction and its value on their payslip.


When you manually complete payroll you have to schedule plenty of time once a month, in line with when you told your employees they would be paid, to do it, as it will take a lot of time. This will depend on how many employees you have, but you will need to be able to focus regardless, so that you don’t make any mistakes. 

You will also have to report everybody’s payslip content to HMRC using your employer ID, so that they can make sure everyone is being paid enough and that everyone is paying enough tax. If they see any mistakes, they will contact you and, in some cases, you could be fined.

Hopefully you won’t have to manually carry out payroll yourself for long, as it is a complex process. Thankfully you can pass it over to HR as we are beginning to see the rise of payroll software that does a lot of the work for you. Your HR is really important, as it can help your business out a lot. If you need any extra help with your business finances though, then you should check out this article here.  

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