Everyone in business knows that budgeting is key in order to maintain a healthy cash flow. Having an idea of your outgoings means you can forecast better, and easily deal with any problems that may arise. Setting aside funds for payroll should be included within your cash flow budget, particularly as it is one of the biggest fixed costs each month.
Not only will you have staff on your back asking where their pay is, but HMRC will also be onto you if you aren’t organised when it comes to your payroll! Let’s have a quick look at what a payroll budget is, and how to introduce one into your business.
What is a Payroll Budget?
Put simply, a payroll budget shows the total projected costs of employing people within your business, during a specific time period. This is usually controlled by HR managers, and fed into the bigger budgeting plan for a business.
It is important to include all full-time employees on the payroll budget, as well as part-time workers, contractors, agency workers, and anyone hired for short-term projects within the business too. Whilst a payroll budget isn’t required by law for HMRC, it is an extremely useful document to have!
Why Create a Payroll Budget?
We have already touched on cash flow, the main reason behind businesses creating payroll budgets, so here are some others:
- Improving business efficiencies
By having a spreadsheet of current payroll costs, you can easily see whether it would be more beneficial to employ someone part-time for an upcoming project, or outsource this to a specialist.
- Growth planning
Even if you don’t plan on hiring new staff as your business grows, you still need to factor in pay rises for your existing staff as they take on new responsibilities. A payroll budget will allow you to see whether this is feasible or not.
- Ensuring compliance
When you pay staff using cloud payroll software, HMRC automatically receives an update of how much is owed in terms of National Insurance Contributions and more. Having a payroll budget will prevent these additional costs from being a surprise, enabling you to factor them into your spending plan.
- Planning for extra benefits
With Christmas looming, many businesses are finding ways to reward their staff for their hard work, but how much do you have available to spend on each person? If you have a payroll budget, you will know exactly how much!
The Importance of Good Software
The best way to create your payroll budget is by using payroll software, such as Sage 50 Payroll. You will be provided with the data you need to create your payroll budget, such as the number of employees, base salaries and more. By integrating the two, you can easily see how your budget measures up against the actual outgoings for your staff too, ensuring nothing is missed.
If you would like to know more about how Sage can help with creating a payroll budget for your business, get in touch with our experts today.
*This article contains general information in order to assist all of our customers and is meant for guidance only – there are no guarantees that the information we provide will be suitable for your particular needs. If you require specific assistance, we recommend that you seek professional guidance on your individual circumstances. Reality Solutions are in no way responsible for any loss or damage arising from any information contained within our articles.
November 28, 2023
You may be surprised to hear that despite having so many different types of software at our fingertips, lots of businesses still rely on spreadsheets for data entry. They can be incredibly powerful, but software is a much safer, more efficient way to improve business...
October 30, 2023
Sage are always committed to making their software better for businesses, to help improve the efficiency within your finance department and therefore maintain that edge over your competitors. In this blog we are having a look at some of the promises Sage have delivered, along...
September 29, 2023
If you are an avid user of Sage 200 you are probably familiar with the 4 key modules: Commercials, Project Accounting, Bill of Materials (BOM) and Business Intelligence. However, today we are taking a deeper look into Sage 200 Commercials, which is all about keeping...
September 06, 2023
If you follow us on social media you may have seen us speak about account reconciliation, but what does this actually mean? We have put together a quick guide to help explain this critical process that allows businesses to keep accurate financial records. Account reconciliation...