Whether you’re starting a new business and processing payroll for the first time or reviewing your current payroll process, it’s always good to know what’s best for you and your company, especially if it can save you time and money.
Whether it is weekly, fortnightly or monthly there are quite a few things to consider when deciding what’s best for you and your business.
Company size, budgets and if your employees are salaried or on an hourly rate are just some of the key considerations.
There are four payroll options
Running payroll weekly is the most expensive option, not only that, but it is also where more mistakes are likely to occur and a heavier workload.
This is where employees are paid every two weeks and most commonly paid on a Friday, this is the second most expensive options for employers.
This is where the employee is paid twice a month, normally at the beginning and the middle of the month, or the middle and end of the month. This is the second least expensive option.
Where employees are paid once a month, either the last working day or a set date each month. This is the cheapest option for running payroll.
What are the pros and cons of running payroll monthly?
Most payroll vendors charge each time you run payroll, so by processing it as infrequently as possible, the less you will have to payout.
The more often you process payments, the more payslips you’re having to provide. If this is paper-based, it’s taking up a lot of your employees’ time by printing and putting each payslip into an envelope, by doing this once a month it could save a potential couple of hours and free up time for other work commitments and priorities.
The cost of envelopes, paper and ink for wage slips also add up over the year and not to mention the impact it has on the environment.
If you’re providing the payslips via email, it is still taking up a lot of time to send and attached each payslip to each employee.
When you run payroll, you have to ensure certain records are kept, such as reports and payments to HMRC, employee leave/holiday and sickness, tax code notices, taxable expenses and benefits, the more often you run the payroll, the more records you have to ensure you’re keeping properly files (for three years, from the end of the tax year they relate to) if you fail in doing so, you could end up with a penalty of £3,000.
The more times payroll is processed the more frequent time-sheets are needed to be checked and hours are to be calculated and entered, meaning the risk of mistakes are more likely to occur, the result in mistakes can lead to unhappy employees and of course more work!
So, in summary, paying monthly will cost you less, free up more time for other work commitments, better for the environment, fewer chances for mistakes, lighten the workload, less paperwork to keep track of and store and less chance of any penalties to occur!
Here at Diamond Accounts, we’re happy to do all things payroll, so come in and have a chat with us today.