PAYE & Payroll Guide

Questions to Answer...

...As an employer, one of the most important things you will ever need to do is pay your employees accurately and on time.

Setting up, maintaining and processing a payroll, is an operation that requires a great deal of thought, expertise and attention to detail. The following are all factors to consider:

1. The nature of your company's business
2. How many employees do you/will you have?
3. What type of employees are they?
   • Directors
   • Contractors
   • Casual Labour
   • Shift Workers
   • Students
4. By what method do you plan to pay them?
   • BACs
   • Cheque
   • Cash
   • BACs is considered by many to be the safest and most popular way to pay your employees.
5. What Pay Frequency do you plan to use?
   • Weekly
   • Fortnightly
   • Monthly (On a specified date of each month)
   • Lunar Cycle (Every 4 weeks)
6. What is your Pay period?
7. What additional payments to you plan to make to your employees?
   • Overtime
   • Bonuses
   • Allowances
8. Will you be providing a pension scheme for your employees?
   (From April 2001 Stakeholder Pension Schemes have been introduced. If you have five employees or more and do not currently offer an occupational pension scheme, you must provide access for your employees to a Stakeholder pension scheme, by at the latest October 2001.
9. Data Security - If you hold data on your employees, you must abide by the rules of the Data Protection Act. Log onto www.dataprotection.gov.uk for further information and guidance.

Answers to all these questions will impact on not only on the way you process and deliver your payroll, but also on the legal obligations you must meet.

For example, the IR has a number of exceptions and special rules set up for certain industries and types of employees; operating such programmes as the Construction Industry Scheme, which assists in the management of construction workers' tax affairs and certain procedures for Directors, contractors and students etc.