How to set up your payroll

Checklist

1. 1 Ensure that you are registered as an employer with your PAYE tax office and have received basic information and PAYE forms.
2. 2 Decide who will be responsible for managing PAYE; consider whether to use the services of a payroll agency or your accountant.
3. 3 Invest in appropriate payroll software: consider how it could be linked into your accounting system.
4. 4 Set up a payroll timetable include the dates for making payments to employees and HM Revenue & Customs, and handling year-end PAYE filings and employee documents.
5. 5 Clarify the legal rules, and your contractual agreements, covering sick pay and maternity, paternity and adoption pay, pension contributions and deductions from pay.
6. 6 Establish a system for dealing with new employees, employees leaving, sickness, maternity, paternity and adoption leave.
7. 7 Implement a system for calculating additional pay (eg bonuses and commission) and any taxable perks (eg company cars).
8. 8 Decide how expenses will be handled.
9. 9 Put security measures in place to protect the confidentiality of payroll information and guard against fraud.
10. 10 Make contingency plans (eg if your computer system fails) to allow you to handle payroll and filings on time.
11. 11 Use your payroll system to generate useful management information (eg employee costs, individual employees records).
12. 12 Keep up to date with payroll rules by reading HM Revenue & Customs mailings; if necessary, contact the employers' helpline or your professional adviser.

Cardinal rules