Category: Accounting

How complicated is the payroll process?

Payroll becomes increasingly complex with company growth, multiple locations, and employees sharing time across numerous cost centers. As a result, the payroll team spends more time handling information, validating entries, and making corrections because inevitably, mistakes will be made.

Check the following main difficulties that you may face during the payroll process:

• Incorrect Format of Employees: Classifying employees incorrectly can cause a significant issue. According to your business need, you can hire freelancers, contractors, and temporary employees but don’t forget to classify them correctly.

• In-correct Deductions: It is very time-consuming to calculate the proper deductions of the employees. If you make a mistake during calculation, it can cost you more, and you may face massive losses.

• Wrong Calculation of time ticket entries: You need to pay serious attention to the employee attendance. Any incorrect entry of time data can affect the whole record and a lot of time and resources will be wasted in the process of finding errors.

• Multi-Region Complications: When your company is set up in multiple locations, keeping up with the different laws and regulations can be a hassle.

• Inexperienced Staff: Payroll processing task if pushed onto the less experienced staff, it may create a significant problem. The results can be detrimental without the right training and necessary expertise to handle the complexities of payroll.

• Payroll Taxes: Tax deduction from earning is another burden on the payroll department. You need to think that how to deposit your funds because several complex rules and policies are guiding each form of deposit and it all depends on your business’ tax obligations. Missing filing tax deadlines can also interrupt cash flow.

Payroll is only one part of your financial responsibility, and although it should be a simple, consistent process, but it is often quite the opposite. Managing payroll is a demanding task, mainly when there are multiple layers of taxation. So the payroll team needs to process payroll accurately and efficiently. But if you have the right software or payroll processing services in place, this isn’t usually a problem

Basic monthly tasks if you run your own payroll

One of the most time-consuming admin tasks associated with the running a small business can be dealing with the payroll.

Generally speaking, you can:

Run your own in-house payroll, or

Hire your accountant to do the work for you.

If you operate your own payroll, there are a multitude of tasks that must be completed each tax month. Tax months run from the 6th of one month to the 5th of the next.

This includes:

• Using payroll software to record employees pay, deductions and National Insurance Contributions on or before each payday. You also need to consider other deductions such as pension contributions and student loan payments.
• Producing payslips for employees. This may require different software.
• Calculating any statutory pay such as maternity or sick pay.
• Updating the system for new employees.
• Reporting employees pay and deductions to HMRC by making a Full Payment Submission (FPS).
• Calculating and paying HMRC all amounts due, by the 22nd (or the 19th if paying by post) of the month following the employees’ payday. 

There are penalties for late reporting and you must also comply with relevant legislation such as ensuring you are paying at least the minimum wage and keeping relevant records.

Planning note

If you are about to employ someone for the first-time or would like to consider what other options are available to manage your existing payroll, we would be happy to discuss how we can help. Alternatively, if you want to continue managing your payroll in-house, we can also advise on the best software packages to get the job done.

Factors to Choosing a Payroll System

If you’ve decided you want to use software to run your business’s payroll, you might worry about the difficulty of choosing a payroll system. To weed through the many services out there, you need to know what to look for.

Choosing a payroll system can be easier than you think if you pay attention to key factors. Take a look at these tips to help you pick the best payroll system for your small business.

Choosing a Payroll System

Using payroll software can save you time and money so you can focus on growing your business.

You don’t need to be a payroll expert to use payroll software, but you do need to purchase a system that integrates with your business needs. The following eight factors will help you learn how to choose a payroll service.

1. Online vs. desktop software

There are two types of software to choose from before you compare payroll services: online and desktop software. What you choose depends on the type of business you have, your lifestyle, and your personal preference.

Online software: Online software, or cloud payroll software, means you can access payroll anytime and anywhere. All you need is internet access to run payroll, which is beneficial if you are constantly on the go. With online software, you can access your payroll records from more than one device. Log in to a computer at your business or your mobile device at home.

Your payroll information is protected if your computer crashes, since it is stored in the cloud. With online software, you pay a continual subscription price. You might pay per payroll period or monthly.

Desktop software: For desktop software, you will download the software program onto your computer. You can only run payroll on the computer that has the software. You do not need internet access to run payroll with this option. 

With desktop software, you will most likely pay an initial flat rate. And you might also need to pay future fees for software upgrades. If your computer crashes, you could lose your data.

2. Cost

So, how much is a payroll service anyway?

As a small business owner, you probably aren’t willing to dole out cash at the drop of a hat. You want services that are affordable and get the job done. When deciding on a payroll system, the cost of payroll services for small business is a priority.

Be wary of hidden fees that might be overlooked during your initial payroll services cost comparison. You might select a provider and later find that there are extra fees you did not know about because of your provider’s payroll services pricing model. Make sure you read the fine print and fully understand what features are included in the price.

Cost usually increases when you need more features. For example, if you want a payroll system to file and remit federal, state, and local payroll taxes, you might need to purchase full-service payroll. Cost typically increases as you hire more employees as well. 

Ask questions about the cost so you aren’t surprised when you receive the bill. Make sure you know what is included in your payroll software. If you plan to hire more employees in the future, ask about the approximate cost per additional worker.

3. Features

Though cost is important when choosing a payroll system, you also want it to perform the tasks you need. Since businesses are all different, the best payroll system for your company should integrate with your business’s unique needs.

Here are some features you should consider when choosing a payroll system.

Payment type: Do you pay your employees via direct deposit, paychecks, or payroll cards? You want your payroll system to accommodate how you pay your employees.

For example, if you pay your employees via direct deposit, you probably want a payroll system that offers free direct deposit, since direct deposit on its own comes at a cost. If you give your employees paychecks, make sure your software supports it. Some software lets you print paychecks when you run payroll.

Pay period: How often do you pay your employees? Every week, two weeks, or each month? Choose a payroll system that lets you pay employees when you want.

If you pay your employees every week, you might not want a payroll system that costs you each time you run payroll. You would end up paying more money to run payroll if you have short pay periods. Instead, you would want a payroll system that lets you pay a flat amount, regardless of pay period. 

Taxes: Depositing and filing taxes takes time and can be confusing. If you want to run payroll without needing to worry about handling payroll taxes, choose a full service plan that deposits and files taxes for you.

If your payroll software deposits taxes for you, you do not need to stress about mistakes or late payments. Your payroll software has you covered.

Supplemental wages: If your employees earn bonuses, commissions, or tips, you need a payroll provider that accommodates supplemental wages.

Let’s say you own a restaurant. Your employees receive tips and report their earnings to you. Supplemental wages are recorded and taxed differently than normal wages. Some payroll providers handle recording and remitting taxes on supplemental wages for you.

Time and attendance: Time and attendance lets you easily track the hours your employees work. Have your employees enter their hours online, or enter them yourself. Attendance management might be an extra feature that integrates with payroll.

Your employees enter their hours, and you run payroll based on their time and attendance tracking. You save time by letting your employees enter their own hours. That way, all you need to do is verify their hours are correct and run the payroll.

4. Support

When you use a payroll system, you have control over your payroll. However, you aren’t alone if you have questions. A payroll system that offers strong support could help you feel more comfortable with running your own payroll.     

Fortunately, many payroll systems offer customer support in some form. And some companies even help you set up your payroll system. If support is important to you, compare levels of support when choosing a payroll system.

Some payroll systems offer online support, support over the phone, or both. Depending on your personal preference, you might factor the kind of support you will receive into your payroll system comparison.

5. Difficulty level

As a small business owner, you’re an expert in your business. But you probably are not an expert in payroll.

Getting a payroll system that makes sense and is easy for you is important when choosing a payroll system. Some payroll systems can get tricky and require background knowledge in order to run them.

Make sure you are confident you can easily learn how to use the payroll system before you buy it. Purchasing a payroll system with a small learning curve saves you time and money. You don’t want to buy something that you spend a lot of time learning, sits without use, or causes you to spend money on resources to learn how to use it. If possible, try out the payroll system before you buy it.

6. Free trial

Some payroll systems come with a free trial so you can get the hang of running your own payroll. A free trial helps you know exactly what you are purchasing.

Check to see if the payroll system you are considering offers a free trial. It lets you learn the system with a hands-on approach and temporarily run your payroll at no cost to you.

7. Security

What happens if someone gains access to all your employees’ Social Security numbers and other personal information? That sounds like a nightmare for both employers and employees.

Security is an important aspect of choosing a payroll system. Make sure you know how the provider secures employee information. And the payroll system should be bonded and insured and have high-security encryption, like banks. That way, you can trust that the information is safe.

8. Contract

Business owners enter into contracts all the time. You need a contract for leases, loans, partnership agreements, confidentiality agreements … you name it, there’s a contract. Payroll systems do not have to be one of those things.

Before choosing a payroll system, see if it will strap you into a year-long contract. If you do enter into a contract with your payroll provider, first make sure the software meets all your needs. You might have to pay a fee to drop out early. The contract forces you to stick with that payroll system, which can be a pain if you later discover hidden fees or you need to purchase extra features.

Introduction to Payroll for Small Business

Let’s start by looking briefly at what a payroll system is and how it works.

Basically, a payroll system has two main functions: to ensure that the employees get paid the correct amount, and to ensure that the government gets paid the right amount of tax.

These days, many companies run their payroll systems using specialized software or online apps (which we’ll look at in the next section). But the form it takes is not important: as long as you do everything accurately, you could also run payroll using your own manual records.

So the basic components of a payroll system are:

• accurate employee records
• calculation of the right wages
• calculation of withholding taxes and other government deductions
• paying employees, either by printing cheques or making transfers
• paying employment taxes to the government
• keeping any necessary records

These are the basics, but depending on your employees’ situations, you may also need to account for overtime, bonuses, deductions towards a pension scheme, and more.

Takeaways for Your Payroll System

Select the best value for your money. If you need payroll to have certain features, make sure those are included in the service. Your business can also benefit from factors like helpful support, a free trial, no contract, and security.

Choosing a payroll system does not have to be difficult. But it does involve comparing payroll providers. Deciding on the payroll system that is right for your business depends on your lifestyle, budget, and level of payroll-related knowledge.

How to start an accountancy business

Wondering how to start an accounting business but don’t know where to start? We’ve got you covered. Whether you’re starting from scratch or you have experience working for someone else under your belt, this guide covers the basics – from qualifications to how to market your business.

Know your day-to-day job

The National Careers Service says that private practice accountants usually have the following day-to-day duties:

preparing financial statements, business plans, and budget reports

producing accounts

auditing

managing clients’ spending and costs

filing tax returns and giving tax advice

forecasting profits and performance

helping businesses that may be in financial difficulty

investigating fraud (forensic accounting)

How much can you earn running an accountancy business?

It depends on factors like whether you’re working on your own or taking on staff, your qualifications and experience, the region you’re working in, the hours you work, and how much time and energy you’ve put into building up a client base.

Get the right qualifications

If you’re starting from scratch, you don’t need a degree to become an accountant, although it can give you useful theoretical knowledge. There’s a range of vocational qualifications you can take, and in fact people who have studied at university often need to take these too

The professional bodies to consider for your qualifications include:

AAT (Association of Accounting Technicians): these qualifications are the minimum you need to start a general career in accountancy

ACCA (Association of Chartered Certified Accountants): these qualifications let you become a qualified accountant, meaning you can give the full range of accountancy services

How To Study Accounting

While there are several rules for studying accounting effectively, learning accounting starts with desire and hard work. If your heart isn’t in it, studying accounting can be pure tedium. Once you’re heart is in it, and you’re ready to give it your all, it’s time to learn how to make maximize your study time and learn how to learn accounting more efficiently.

Studying accounting from a textbook is different than studying other subjects such as history, economics or biology

When reading a history textbook you can get by if you’re able to understand 90 percent of the information or if you come away with a general idea of what’s going on. Not the case with accounting. Read your textbook for understanding. And if you don’t understand it, read it again. If you understand a concept being introduced, then it’s okay to skim the text or skip ahead. But make sure you understand the concept(s).

Similar to math, accounting concepts build upon one another. What you learn in chapter 2 builds on what you learned in chapter 1. What you learn in chapter 3 builds on what you learned in chapters 2 and 1. If you didn’t really grasp the concepts taught in chapter 1, you’re going to have a difficult time learning the concepts in chapter 2 – and you’ll most likely be lost by chapter 3. It’s imperative that you thoroughly understand the concepts being taught in each chapter before moving on to the next chapter.

Scanning text for main points doesn’t work in accounting. Accounting textbooks are meant to be read. Almost everything that is included in your accounting book is important. So when you read… read everything.

Read your accounting textbook to understand “WHY.”

Accounting doesn’t require you to memorize as much information as other subjects do. It does however require you to understand “WHY.” Accounting is all about “WHY.” As you read your textbook discover the “WHY” in what you’re reading. Try to understand the logic behind what is being taught.

When you finish studying a new topic from your textbook, try to put it in your own words. Explain the new concept to yourself or someone else. Putting concepts in your own words and explaining them aloud is far more effective than reading a text over and over again.

Discover the “HOW.”

Once you understand the “why”, it’s important to discover the “how”. It’s not enough to understand why an accounting principle or concept works, if you can’t apply it. You must understand how accounting concepts work and be able to apply them.

In order to discover how accounting principles work and how they are applied, work the problems included in your accounting textbook. Most chapter problems are designed specifically to help you discover how to apply the principles or concepts being taught in that section. Work each problem before checking your answer.

Review as you go.

Any subject is easier to understand and remember if you thoroughly learn it the first time through. But if you’re unable to remember everything you’ve learned, you’ll just start reviewing a few days before finals, right? This may be an acceptable strategy if you’re studying history or sociology, but not when you’re studying accounting. The most effective way to learn accounting, and retain what you’ve learned, is to “REVIEW AS YOU GO”.

If it’s a bad idea to cram for a history exam the night before a test, it’s a very bad idea to cram for an accounting test. Never postpone reviewing your accounting until examination time.

As you review, visit previous chapters in your textbook and rework problems you struggled with. Find other accounting problems similar to those that were difficult for you and work those problems too.

At the end of each week take some time to review your notes (1) to refresh your memory and (2) to make sure you understand everything you studied during the week. Remember, information that is forgotten must be relearned. The time required to relearn information is often the same as learning it for the first time. It’s far more efficient to review as you go than to attempt to relearn forgotten information at the end of the term or semester.

Ask questions and get answers to your questions throughout the semester. Your professor, or teacher’s aid, isn’t going to be anxious to sit down with you for several hours at the end or the term to answer all your questions and re-teach you concepts you should have learned along the way. AND when your professor asks you what you don’t understand, don’t say “everything.” Statements like this suggest you’ve made very little effort on your own to try and understand. Before asking questions, pinpoint exactly what you don’t understand. Make sure your questions are specific.

Accounting basics

Whenever you make a business decision, you should always have figures to back it up. On this page you’ll find accounting basics to keep your business on track and encourage investors.

Improving your financial position

Review your business finances with your financial advisor or accountant. Look at whether you met your targets last financial year and what you can do differently this year to help your business grow.

Checking your registrations and licences

Your business operations may have changed during the year. Review the current licences, permits and registrations your business holds.

Reviewing your bookkeeping system

Keeping good records:

makes running your business much easier

may be needed to comply, depending on your industry

helps you to keep track of how your business is going financially

Updating your business and marketing plans

Take time to set yourself up for the year ahead. Updating your business and marketing plan can:

help you review your goals and priorities

assess whether your business strategies are working

Career in finance

here to help.

Whether you’re new to finance or want to develop your existing skills, you’ll find everything you want to know about job roles, salaries, progression opportunities and things to think about before taking that next step

Starting your career

Deciding what career to set off on is such an exciting time. But it can also be a little overwhelming. We’ll help you understand what it really means to be an accountant or bookkeeper so you get an idea of whether it interests you, and if it will take you where you want your career to go.

Growing your career

If you’re already working in finance you’ll have an idea of the opportunities available to you. But what’s the best way to gain the skills and confidence to take the next step up? Grasp these opportunities and you could soon be climbing the career ladder.

Changing your career

If you’ve got a passion for numbers and have been thinking about changing to a career in finance, what’s stopping you? We’ll take you through the things to think about, and how to get where you want to be. Whether that’s working in a finance team or running your own bookkeeping business, the possibilities are endless.

Learner Reviews & Feedback for Introduction to Financial Accounting

Master the technical skills needed to analyze financial statements and disclosures for use in financial analysis, and learn how accounting standards and managerial incentives affect the financial reporting process. By the end of this course, you’ll be able to read the three most common financial statements: the income statement, balance sheet, and statement of cash flows

Accounting is sometimes counterintuitive and this course does not alleviate that. Expect to spend twice the recommended weekly time on the course, especially if you have no background in accounting. Expect to have to retake the quizzes multiple times to get a pass. (The scoring approach for quizzes means that getting 2 of 3 selections correct in a 5 selection question will still result in a zero score for that question.)

The lecturer tries to add humor with cartoon characters, puns and songs. This takes up valuable time that would be better spent explaining the reasons behind some of the counterintuitive aspects (e.g. a debit will increase a cash account); or offering some approaches to assist in memorizing the key equations and relationships.

Suggest you print out the quizzes before you watch the videos (Note: the questions will change each time you submit an attempt, so be ready for new questions!). The printout will let you try to identify the answers as you go. Also, make notes of equations and do your best to relate them to the entries in the spreadsheets to try and identify the impact of low level alterations on high level entries.

Stick to the fundamentals and get rid of the animations—they distract from the material. Stress the importance of learning the “grammar”—the types of accounts. Lessen the amount of “curve ball equations” and test at the introduction level to make sure we really learn the basics.