First time employer - tips for employee payroll

[RockyBalboa]

I'm hoping to start employing someone in June and due to their financials, they don't want to be paid in arrears.

In their current role they are paid on the last working day of the month and any additions or deductions (additional time, overtime, sick, holiday is taken care of in the following month's payroll) but doesn't this cause a mass panic/rush on that last working day of the month to get everything across to the accountant?

Any tips/suggestions?

[kiethton]

RockyBalboa said:

I'm hoping to start employing someone in June and due to their financials, they don't want to be paid in arrears.

In their current role they are paid on the last working day of the month and any additions or deductions (additional time, overtime, sick, holiday is taken care of in the following month's payroll) but doesn't this cause a mass panic/rush on that last working day of the month to get everything across to the accountant?

Any tips/suggestions?

Being paid in arrears is totally normal and leaves you at a major disadvantage if things go wrong - I'd pay in arrears as 99.9% of employers do.

If anything like most you'll have a payroll cut-off day (commonly mid-month), with anything after that hitting the next months payroll. Above is how we manage it for our charity.

[Koyaanisqatsi]

Technically you have until the 19th of the following month to file the payroll submission with HMRC and pay any PAYE/NI due -- there doesn't need to be an urgency on the final day of the month.

March's payroll is traditionally done at the end of March for example, but the payment and HMRC submission wouldn't need to be filed until 19 April.

[RockyBalboa]

kiethton said:

RockyBalboa said:

I'm hoping to start employing someone in June and due to their financials, they don't want to be paid in arrears.

In their current role they are paid on the last working day of the month and any additions or deductions (additional time, overtime, sick, holiday is taken care of in the following month's payroll) but doesn't this cause a mass panic/rush on that last working day of the month to get everything across to the accountant?

Any tips/suggestions?

Being paid in arrears is totally normal and leaves you at a major disadvantage if things go wrong - I'd pay in arrears as 99.9% of employers do.

If anything like most you'll have a payroll cut-off day (commonly mid-month), with anything after that hitting the next months payroll. Above is how we manage it for our charity.

I do agree but there will be a couple of managerial staff and the rest will likely be on minimum wage in a short staffed sector.. therefore, month in arrears won't really be practical nor conducive to recruiting and retaining staff.

Edited by RockyBalboa on Thursday 13th April 14:50

[RockyBalboa]

Koyaanisqatsi said:

Technically you have until the 19th of the following month to file the payroll submission with HMRC and pay any PAYE/NI due -- there doesn't need to be an urgency on the final day of the month.

March's payroll is traditionally done at the end of March for example, but the payment and HMRC submission wouldn't need to be filed until 19 April.

The accountant will do all the filing/sending of pay slips but I'd have to send them all the hours/days for each employee on the last day of the month and then make the payment to the relevant employees.

[22]

RockyBalboa said:

The accountant will do all the filing/sending of pay slips but I'd have to send them all the hours/days for each employee on the last day of the month and then make the payment to the relevant employees.

Payroll is probably included free (or for very little extra) with your Xero/QuickBooks etc software. Getting an accountant to do payroll admin sounds bonkers (I do it for our small company and the software holds my hand enough).

[Freddie Fitch]

Sorry if I'm misunderstanding OP. When you say a month in arrears does this mean a month in hand?
I'm paid in arrears. This just means I'm paid for March on the last working day in March.

[RockyBalboa]

22 said:

RockyBalboa said:

The accountant will do all the filing/sending of pay slips but I'd have to send them all the hours/days for each employee on the last day of the month and then make the payment to the relevant employees.

Payroll is probably included free (or for very little extra) with your Xero/QuickBooks etc software. Getting an accountant to do payroll admin sounds bonkers (I do it for our small company and the software holds my hand enough).

It's a small amount extra per employee so not too bad at this stage.

[RockyBalboa]

Freddie Fitch said:

Sorry if I'm misunderstanding OP. When you say a month in arrears does this mean a month in hand?
I'm paid in arrears. This just means I'm paid for March on the last working day in March.

Month in arrears means that, for example, for someone starting in April, they would be paid at the end of May and for May they would be paid in June so one month of wages is kept in hand.

[RockyBalboa]

On reflection, I think what I am going to do is pay managerial staff on the last working day of the month and all other staff a cycle of the 26th of each month. i.e. for April they would be paid from 27th March to 26th April with the pay hitting their bank account on the last day of April and then for May they would be paid from 27th April to 26th May and be paid on the last day of May.

[Panamax]

RockyBalboa said:

On reflection, for May they would be paid from 27th April to 26th May and be paid on the last day of May.

How's that cycle going to fit with you accounting periods for annual accounts??

I'd pay end of month in the usual way. If a new employee is struggling with cash flow you can give them a cash advance at the end of each week and deduct from net pay at month end. Make sure the advances add up to less than a full month's pay so that after a few months they can move completely onto the same monthly pay cycle as everyone else. You're the boss; they're the employee.

[bristolbaron]

RockyBalboa said:

On reflection, I think what I am going to do is pay managerial staff on the last working day of the month and all other staff a cycle of the 26th of each month. i.e. for April they would be paid from 27th March to 26th April with the pay hitting their bank account on the last day of April and then for May they would be paid from 27th April to 26th May and be paid on the last day of May.

Our timesheets run from 25th-24th. This allows for Christmas, Feb and inconvenient weekends.
Your dates wouldn’t allow sufficient time for example for working Friday 26th Feb which wouldn’t be processed until Mon 1st March.

[pherlopolus]

22 said:

Payroll is probably included free (or for very little extra) with your Xero/QuickBooks etc software. Getting an accountant to do payroll admin sounds bonkers (I do it for our small company and the software holds my hand enough).

We employ about 20 and let our accountant deal with it, we also outsourced HR. This has saved us much grief over the past couple of years, I would advise anyone employing people to always leave these things to professionals as it is so easy to get it catastrophically wrong.

[22]

pherlopolus said:

We employ about 20 and let our accountant deal with it, we also outsourced HR. This has saved us much grief over the past couple of years, I would advise anyone employing people to always leave these things to professionals as it is so easy to get it catastrophically wrong.

I wrongly read it as the OP's first employee, although payroll is incredibly simple/automated with software linked to HMRC these days.

[pherlopolus]

Yes I agree it is simple, but as a function of someone’s time in the business it’s neither here or there from a cost point of view. Not all businesses are the same though.

[Countdown]

RockyBalboa said:

I'm hoping to start employing someone in June and due to their financials, they don't want to be paid in arrears.

In their current role they are paid on the last working day of the month and any additions or deductions (additional time, overtime, sick, holiday is taken care of in the following month's payroll) but doesn't this cause a mass panic/rush on that last working day of the month to get everything across to the accountant?

Any tips/suggestions?

The normal practice is to have a "cut-off" around the middle of the month for variable payments (such as Overtime, unsocial hours etc). Any claims that miss this date get paid the following month.

[RockyBalboa]

bristolbaron said:

RockyBalboa said:

On reflection, I think what I am going to do is pay managerial staff on the last working day of the month and all other staff a cycle of the 26th of each month. i.e. for April they would be paid from 27th March to 26th April with the pay hitting their bank account on the last day of April and then for May they would be paid from 27th April to 26th May and be paid on the last day of May.

Our timesheets run from 25th-24th. This allows for Christmas, Feb and inconvenient weekends.
Your dates wouldn’t allow sufficient time for example for working Friday 26th Feb which wouldn’t be processed until Mon 1st March.

Good suggestion, thanks.

[RockyBalboa]

Countdown said:

RockyBalboa said:

I'm hoping to start employing someone in June and due to their financials, they don't want to be paid in arrears.

In their current role they are paid on the last working day of the month and any additions or deductions (additional time, overtime, sick, holiday is taken care of in the following month's payroll) but doesn't this cause a mass panic/rush on that last working day of the month to get everything across to the accountant?

Any tips/suggestions?

The normal practice is to have a "cut-off" around the middle of the month for variable payments (such as Overtime, unsocial hours etc). Any claims that miss this date get paid the following month.

This makes sense, thanks.