The term ‘payroll’ essentially means a list of employees within a company, how much they need to be paid, and when.
Therefore, the main aim of a payroll department within any firm is to ensure that its employees are paid correctly, accurately, and on time.
The payroll team is also there to ensure that the company is performing its legal obligations - paying wages, taxes, and pension contributions as it should.
The full range of tasks that a payroll team is responsible for is too long to list, but fundamentally, these include:
Payroll can sometimes be run manually for small businesses with few employees, however, it’s most commonly done using payroll software or it is outsourced to an accountancy firm, such as Duncan & Toplis.
Getting payroll correct is very important for your firm and its employees, as well as for tax authority purposes. As the Chartered Institute of Payroll Professionals (CIPP) explains, payroll deals with approximately 170 different pieces of legislation - and that number is constantly growing!
It’s important to note that payroll is significantly different to human resources (HR). HR is the management of employees within an organisation, ensuring that the firm is complying with labour laws and regulations. Payroll on the other hand is the management and processing of the pay of those employees. With this in mind, your company should have both HR and payroll services to complement one another.
Ultimately, earning money is the primary motivation for employees to turn up to work and do their jobs well so payroll is often described as one of the most important functions for a business.
Aside from the obvious key role in ensuring employees remain in the business, there are many other reasons why effective payroll is essential to any firm.
Company reputation
Firms that are unreliable with their payroll services are at risk of building up a bad reputation, which could then attract unwanted attention from tax authorities. If staff speak out about their issues, it may also hurt the company’s chances of attracting future talent when recruiting.
Employee morale, engagement, and productivity
By paying your staff timely and correctly, it creates a level of trust between the firm and its employees. This is likely to lead to increased motivation, as team members are financially stable - benefiting their morale. It can even have a positive impact on their performance, as they respect the company they work for.
Business compliance
Processing payroll correctly is crucial to ensure that your firm is compliant with tax laws and reporting obligations to the authorities. This helps the company to avoid any penalties or fines as a result, which saves money and reduces unnecessary costs.
Maintaining financial integrity
Having a well-managed payroll system within your company contributes to a transparent, accountable financial system within an organisation, which maintains financial integrity and reliability.
Having suitable financial partners is paramount to the success of any company, no matter how large or small it is. Our advisers can work with you to identify the best service for your business - get in touch today.
