How to set up a Payroll System – How to set up your payroll Checklist

1 Ensure that you are registered as an employer with HM Revenue & Customs (HMRC) and register for PAYE Online.
2 Decide who will be responsible for managing PAYE; consider whether you will operate PAYE yourself, use the services of a payroll agency or your accountant.
3 Invest in appropriate payroll software: checkit is compatible with HMRC’s ‘Real Time Information’ reporting requirements and how it could be linked into your accounting system.
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 Clarify the legal rules, and your contractual agreements, covering sick pay and maternity, paternity and adoption pay, pension contributions and deductions from pay.


6 Check employees’ data is accurate and complete; gather any missing information ready for submission to HMRC.

7 Establish a system for dealing with new employees, employees leaving, sickness, maternity, paternity and adoption leave.

8 Implement a system for calculating additional pay (eg bonuses and commission) and any taxable perks (eg company cars).

9 Decide how expenses will be handled.

10 Put security measures in place to protect the confidentiality of payroll information and guard against fraud.

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Make contingency plans (eg if your computer system fails) to allow you to handle payroll and filings on time.

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12 Use your payroll system to generate useful management information (eg employee costs, individual employees records).

13 Keep up to date with payroll rules by reading HMRC mailings; if necessary, contact the employers' helpline or your professional adviser.


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