How to manage a seamless payroll
Your business is up and running and you're starting to take on staff. How familiar are you with the responsibilities of running a payroll scheme? If you're doing it yourself, Nicola Cantrill from our payroll team, can offer a few useful tips to help you get it right.
Running a company can be exciting and exhilarating, but it also involves plenty of hard work. There are obligations that come with the territory too – such as paying your staff on time and handling all the interactions with HMRC.
Here are some of the key things you need consider before getting going:
REGISTRATION
First things first. You'll need to register as an employer with HMRC and get a PAYE reference number, which is essential for ongoing communication over tax. You'll need to set up a login for a government portal.
SOFTWARE
The next challenge is finding the right kind of compatible accounting software that will allow you report to HMRC. All employers are expected to file information in real time.
The software you choose needs to record details of employees (including name, address, date of birth, NI number), calculate their pay and deductions, as well as statutory maternity/paternity/adoption and sick pay. It will report payroll information to HMRC and work out how much you need to pay after deductions are made, it will also send any tax coding notices to be changed from HMRC. If you need your platform to handle payslips, pensions and other additional aspects of payroll, it's worth taking some advice before settling on the appropriate package.
For details of software recognised by HMRC, click here.
RECORD-KEEPING
Some of the records you're expected to keep are, the payments you issue to employees and any deductions you've made, along with the reports you've filed to HMRC and the payments you've made to the government. Just remember, however, that it's also a requirement to keep information about employee leave; sickness absence; tax-code notices; taxable expenses and benefits; and any payroll giving scheme documentation.
NEW EMPLOYEES
Once you've checked that a new starter needs to be on PAYE, you'll have to work out their tax code (by using a P45 or using the HMRC checklist filled out by your employee) and find out if they have to repay a student loan. Once you've established these essentials, you can set them up on your system and register them with HMRC using a Full Payment Submission (FPS).
A new coding notice may also be sent through your software for a new starter once they are registered.
YOUR MONTHLY RESPONSIBILITY
Tax months run from the 6th of one month to the 5th of the next one. Every time you run the payroll, you need to record the salary payment and any deductions (including tax, employee's NI, pension) for each employee. You will also need to calculate your employer's NI contributions. Produce payslips and any P45's for leavers and file a report to HMRC using real time information (RTI).
PAYMENT
Then, of course, there's the small matter of payment to HMRC! You will be charged interest and penalties if you don't meet the deadlines, so make sure everything is in place. There are actually numerous ways to pay, so choose the one that is most convenient for you.
Note: As an employer you will also need to consider a workplace pension for automatic enrolment.
If you've found the above information useful, but want to dig a little further into the detail, why not give us a call here at Page Kirk? You can contact us on 0115 955 5500 or email enquires@pagekirk.co.uk
Or click here to find out more about our payroll services.
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The Page Kirk team is committed to providing content that adheres the highest standards for accuracy. We evaluate how the content of each article aligns with current financial procedures and standards. Therefore, the information presented in this article is accurate and up-to-date.