For many start-up businesses, the time will come when you’re ready to take on staff. It’s an exciting new chapter – but will payslips and PAYE spoil the fun?
Preparing for PAYE
If you thought PAYE was just about listing your employees’ salary or wages, think again. You’ll need to take into account any overtime, bonuses or commission as well as things like statutory sick pay and maternity/paternity/adoption pay. But that’s not all. There’s also the matter of figuring out deductions for Income Tax, National Insurance contributions and pension contributions
Oh, and if you’re a limited company, a quick heads-up – directors are classed as employees.
Payslips a go-go
Each of your employees will need a payslip. It’s kind of important because if they don’t get one they might just mention your name to an employment tribunal. This means more number-crunching – calculating net pay after deductions have been taken from the gross pay.
Weekly, fortnightly or monthly – it’s up to you when you pay your employees. But whatever you decide, whenever you make a payroll payment you’re obliged to let HMRC know via an online submission. You see, once upon a time you could give HMRC the payroll payment details at the end of the year, but then Real Time Information [RTI] was introduced in 2013 and changed all that.
By the way, according to one study nearly 40% of small businesses were clueless about the new RTI rule coming in. If only they’d had an accountant to let them know, eh?
Payments... and penalties
Paying your employees isn’t the same as paying HMRC. No, siree. The Inland Revenue wants to see the colour of your money for tax and NICs either monthly or quarterly. And, no surprises, paying late may incur interest.
There are also penalties for being lax with that RTI info. How much you pay will depend on the number of employees you have in your business,
Should you DIY?
There’s no reason why you can’t sort out payroll yourself with the help of HMRC’s free software and calculators. But it’s still a tricky job because that gratis help only goes so far – it doesn’t extend to sorting out deductions or issuing payslips for a start. So, the question is – do you have the time and patience for DIY? Or would you rather hold onto your sanity and outsource payroll to an accountant like us? (Yes, OK, we know, that’s two questions!)
* Want to hear more about our payroll service? Brilliant – simply call us on 0845 308 1454 or email firstname.lastname@example.org