Paying your employees for beginners: What to consider
Photo by Tima Miroshnichenko
If you’re running a relatively new business or you’ve taken on your first employees (or are planning to) then there’s nothing more important than ensuring that you’re meeting their rights for fair and timely pay. However, since you can’t just pay them cash in hand, you have to ensure that you’re doing it the right way, and the tips below should help you with that.
Setting the pay
First and foremost, setting your employees’ pay, be it a salary or hourly rate, requires some consideration. You can research what similar businesses are paying using salary benchmarks or the pay comparison sites out there, but you should also consider location, experience, as well as any additional responsibilities you may need to pay for. What’s more, you need to consider whether the pay is sustainable for your business in the long run, as well as non-monetary perks that can add to the offer, like flexible hours or training.
Know your employment law
Get to know all of the labour laws that apply to you before you decide how, exactly, you’re going to pay employees. This includes laws on minimum wage, paid time off, taxes, and whether your workers can be classed as employees or freelancers. You are going to need to register as an employer in the majority of cases, so be sure that you do just that.
Setting up payroll
One of your most important responsibilities is to pay your employees on time, every time. This means that you need to choose a payroll system that works for you, calculates pay, deducts taxes, and ensures that pay is sent out accurately and as expected. There are plenty of payroll options out there, as well as payroll providers or accountants who can handle that responsibility for you. Automating the process can remove a lot of room for human error, which is always worth considering.
Providing payslips
Aside from ensuring that the money lands in your employees’ bank accounts, providing payslips is recommended and, indeed, often legally required. Even if it isn’t in some cases, it’s best to do it anyway. You can make use of a payslip template and make sure that it includes all the gross pay, deductions, as well as contact details, should your employees need to get in touch if there’s any issue. Accurate payslips ensure that your business doesn’t get into disputes over how much should be paid down the line.
Plan for payroll taxes
When you’re running payroll, you also have payroll taxes that you’re going to need to pay, as well. In most cases, you have to implement the Pay As You Earn (PAYE) system in your workplace payroll and make other deductions from the employee’s gross salary, including pension contribution and student loan repayment. Setting everything up through the tax service should ensure you know precisely what you have to pay and when.
Many of the most common employee complaints and legal battles with small businesses are tied directly to how they handle pay. Ensure that you avoid any of that with the tips above, ensuring that you’re doing everything clean and above board.