payroll manually

How to Calculate Payroll Manually?

30/05/2023tax , Tax Issues , Tax News and Tips , Tax Saving Tips , Taxation

Doing the payroll manually explains that the whole procedure of the payroll will be handled by hand details. Whereas in the case of the in-house computerised system, you will have to require trained staff that can use the payroll software along with the cost of having the software installed in your system. In case the businessmen or the owner seek the outsourcing way of help in this regard with the involvement of the external system, the payroll service provider is a better option to avail. However, this too costs you quite much which in the case of a new business setup, any of you might not be avail at the early stage. There is no doubt that any number of employees can be handled if you have a good payroll system rather than doing it manually.

Moreover, further in the details, this comprehensive guide holds the discussion about the steps that will help a new business set up to do the payroll manually. This possible could involve the focus on checking the employee’s pay on an hourly basis, and overtime wages of the employees, figuring out how much the salary of the employees altogether, then considering starting the statutory deductions, and along with this the voluntary deductions will also be made. To check how to implement the process, let us kick off the discussion to learn better.


Reach out to our smart and clever-minded guys to get an understanding of how to calculate payroll manually in the UK. We will help to understand your queries instantly.


How to Calculate the Payroll Manually?

In case you have a small payroll to handle which is only possible for the new business setup and the small business setups, only then using the manual method of payroll is recommended. This can include the employee within the limit of 10 or less.

If you consider this fact then payroll processing procedures and the tax matter involved with this situation can be catered in a successful way by doing the payroll manually. In the following, there are step-by-step explanations to complete the procedure of doing the payroll manually.


Step 1: Check the Employees with Hourly Pay

The first and basic need to take the first step is to figure out the employee’s pay on an hourly basis. In a normal scenario when employees are considered to be working on an hourly basis the records are maintained with the use of a timesheet or punching the clock time.

Here it is important for the employees to be regular with signing the timesheet along with the supervisor if the business has it. Otherwise, in the absence of these records, there will not be any detail to keep track of and to do the required deductions.


Step 2: First 40 Hours of Work and Overtime Wages

Once you are done ensure that the timesheet is maintained and signed by the employees on a regular basis, the second important step is to ensure that the wages are paid regularly on an hourly basis. So that there is no loophole left that will disturb the procedure of doing the payroll manually.

Focus on the payment of the first 40 hours of the employees and the wages of overtime if this is applicable to any of the employees. In many cases, the hourly rate of the overtime hours is different than the regular hours of the employees.


Step 3: Determine Salaried Workers’ Pay

After the basic stages, now is the requirement to determine what the workers pay who are salaried. In a regular norm of practices, the employer usually gives the salary on a specific date and does not delay it. There are also cases of employees where the salary will have to undergo the process of deductions.

This is mostly applicable when a new employee is being appointed and if an old employee is being terminated. This is also applicable in the case of an employee who has taken the benefits of the days off more than was allowed by the employer.


Step 4: Subtract Statutory Deductions

After determining employees’ wages, timesheets, and other records, now is the time to make the deductions like the statutory deductions. This involves the deductions like wage garnishments and other taxes that an employee is liable to pay in the UK. The filing status of the employee will matter a lot in the case of income tax. The wage checker and the relevant tax bands can be seen to check how much amount will be deducted. Moreover, the other basic tax deductions like the national insurance contributions and the value-added tax will also be considered before the salary is given to the employee.


Step 5: Subtract Voluntary Deductions

After all the relevant deductions for the days off more than allowed and tax is subtracted from the number of wages, consider the voluntary deductions as well before the pay approaches the employee’s accounts. These voluntary deductions will involve parking fees, retirement contributions, and employees’ health benefits. After all the consideration of voluntary deductions as well as the mandatory tax deductions, double check the working to avoid any kind of mistakes. As this can create serious hassle later in the future. You might have to pay the penalty in such a scenario. After all the procedures of working, the result you get is known to be the net pay of the employee.


The Bottom Line

Now that you have gathered a fair amount of information about how to calculate the payroll manually in the UK for the new business setups, we can bring the discussion towards wrapping up. It is easy to do the payroll manually if you consider the basic steps and avoid mistakes in this regard. In case of doubt about the calculations, double-check the entries and the details of the deductions. This is because of the fact that any wrong deduction can bring in penalties for the employer. So it is better to be on the safe side rather than suffer later for the mistakes in the details and data of the payroll. We hope these few minutes of reading will help you to develop a better understanding of handling the payroll manually being a new business setup in the UK.


Our team of professional members loves to hear out your business problems and find out the possible and suitable solutions quickly to the reporting in the UK. Contact us now.


Disclaimer: The information about how to calculate payroll manually provided in this blog includes text and graphics of general nature. It does not intend to disregard any of the professional advice.

Related post