Running payroll needn’t be taxing but if you’re a new business it can be tough to get to grips with the requirements of managing payroll. The vast majority of businesses use either a piece of payroll software, or outsource the calculations completely. To help you make the right choice for you, here’s a breakdown of your obligations.
The first thing to do is to make sure Her Majesty’s Revenue and Customs (HMRC) are aware of your employer status, and that you will be making contributions for your employees. You can do that by registering online and getting a login for the web-based PAYE Online system.
Navigate through your payroll software and enter (and then regularly update) your employee and business details such as your employees’ personal information including National Insurance numbers and tax codes. Use this information to calculate pay and deductions, then report the figures to HMRC.
It’s vitally important that you collect and keep good records throughout this process. You’re expected to report what you pay your employees and the deductions you make for things like sickness absences, taxable expenses or benefits or Payroll Giving Schemes. You need to keep these records for three years and if they’re not up to scratch you can be fined up to £3,000.
Once you’ve run payroll you’ll then need to pay HMRC the amount of tax and National Insurance you say you owe for the employees you’ve reported. There are also certain reports which need to be filed every year.
There’s a few other things which also need reporting, such as when a new employee joins and if an employee’s circumstances change, for example they become eligible to receive a state pension or are elevated to the position of director.
There’s certainly a lot to consider and working with a specialist firm like Loveless Accountants can take the fuss out of your payroll planning. We can help with services at all ranges – from just supplying payslips to comprehensive support including the filing of HMRC forms (P60s etc), holiday, sick and maternity pay management. That’s from as little as £10 per month.
We can also help with the pressure of the other volume of information and accounting which running a small business requires. Talk to us about managing your pensions auto-enrolment, and how to calculate employee and employer contributions to meet the government’s rules. We’re also great at jobs like self-assessment tax returns and calculating VAT liability.
It’s not easy getting a new business off the ground but it’s easy to get the help you need to keep your accounts in order. Talk to one of our friendly team today.