If you are thinking of making the change from manual payroll processing to using UK payroll software for a small or medium sized business, you are almost certainly making the right choice. It is not only the right choice, it is very easy to make the change, and there are only a few formalities you need to accomplish before you are up and running. This guide explains the steps you need to take when setting up payroll software, and the main differences between manual processing and software processing.

Making the transition

If you have been managing in-house payroll manually, then you should already have a firm grasp of PAYE calculations, deductions and additions. You should have experience in starter and leaver forms, updating your payroll records throughout the year and conducting the Employer Annual Return. All of these processes are easier and quicker to manage with a payroll manager, and the majority of additions and deductions are handled automatically.

Once you have purchased UK payroll software for your small or medium sized business, you will first have to create a new employer profile and add your company details, such as your company address and PAYE registration information. You can either choose to start for a new tax year, or to continue payroll from any point in the current tax year – the process will ensure that you include all the relevant information you need to.

Employee information

You will need to manually enter the details of all of your employees, and once logged onto the system, employee details, pay and working hours are used to make the automatic deductions and additions, and the software will track the employee’s status as the year progresses. For example, if an employee is off sick, you simply note on the employee calendar the days they are off, and the software will know automatically whether to apply Statutory Sick Pay or not, depending on how much they have already used up in the tax year. Other deductions like national insurance contributions and student loans deductions are handled automatically, and pay records are likewise updated automatically.

Software makes online filing easy to manage. It will automatically create the figures throughout the year and import the necessary information for when you conduct the P14 and P35 online returns, as well as P45/P46 online reporting for starters and leavers. When Real Time Information (RTI) comes into effect in the coming tax year, every time you pay an employee you must submit certain information to HMRC – make sure you choose RTI payroll software which will be able to handle this change (consult the software provider’s website).

An easy transition

It can be a challenge to begin with payroll software, but once you are familiar with the layout and the features provided, the software will make payroll easier and quicker. There is no longer need to use those fiddly tax tables nor manually complete reams of forms. All leading UK payroll software is designed to streamline and speed up the payroll process and to calculate everything accurately and according to HMRC regulations.