Why Payroll Matters for Small Businesses

If you employ staff, even just one person, you have legal responsibilities when it comes to paying them correctly. UK payroll processing involves more than just issuing payslips; it includes calculating tax, submitting data to HMRC, and meeting strict deadlines. Getting it right protects your business from penalties and ensures your employees are paid on time.

What Is Payroll Processing?

Payroll processing is the act of calculating employee wages, deducting tax and National Insurance, and submitting this information to HMRC under the PAYE (Pay As You Earn) system. It also involves issuing payslips, paying your staff, and making timely reports.

Key Payroll Responsibilities for Employers

1. Register as an Employer

Before hiring staff, you must register with HMRC as an employer. This sets you up to operate PAYE and submit reports.

2. Collect Employee Information

This includes National Insurance numbers, P45s, personal details, and tax codes.

3. Run Payroll and Calculate Deductions

Each pay period, you must:

  • Calculate gross pay
  • Deduct income tax and NICs
  • Apply student loan or pension deductions (if applicable)
  • Include any reimbursements or bonuses

4. Report to HMRC

You’ll send a Full Payment Submission (FPS) on or before each payday using payroll software. You may also need to submit an Employer Payment Summary (EPS) if you reclaim statutory pay or don’t pay anyone that month.

5. Issue Payslips

Employees must receive an itemised payslip every pay period, showing earnings and deductions.

6. Make Payments to HMRC

You must pay tax and NICs to HMRC by the 22nd of the following month if paying electronically (or by the 19th if by post).

Common UK Payroll Deadlines

  • FPS: On or before each payday
  • EPS (if needed): By the 19th of the following month
  • HMRC payments: By the 22nd each month (electronic)
  • End-of-year tasks: Issue P60s by 31 May, file P11Ds by 6 July

Choosing Payroll Software

HMRC-recognised software like Xero, QuickBooks, BrightPay, or Moneysoft can make the process much easier. Look for options that support Real Time Information (RTI) reporting and auto-enrolment pensions.

See the full list of HMRC-approved software here.

Auto-Enrolment and Pensions

Since 2012, UK employers must automatically enrol eligible staff into a workplace pension scheme. You must:

  • Assess eligibility
  • Enrol staff within six weeks
  • Deduct contributions
  • Declare compliance to The Pensions Regulator

Payroll Mistakes to Avoid

  • Missing submission deadlines
  • Using incorrect tax codes
  • Failing to update employee details
  • Not issuing proper payslips
  • Forgetting EPS when reclaiming statutory pay

Can I Do Payroll Myself?

Yes – small business owners can run their own payroll. However, as your team grows or legislation changes, it becomes more time-consuming and risky. Most business owners find it more efficient to outsource payroll to avoid mistakes and free up time.

Why Choose A Wigglesworth & Company?

We provide fully managed payroll services for businesses across the UK and beyond. From PAYE setup to compliance, pensions, and reporting; our expert team in Doncaster handles it all, so you don’t have to. We ensure every detail is covered, giving you complete peace of mind.

Speak to Our Payroll Experts

Whether you’re hiring your first employee or scaling a growing team, we’re here to help. Contact us today to learn how A Wigglesworth & Company can support your payroll needs nationwide and beyond.