Are You Ready To Pay Your First Employee?
Running a business requires staff or employees. One person cannot do all the tasks and responsibilities of handling a business. Even small businesses may need to hire one to three employees to cover all the tasks for the business. If you are planning on hiring one, it is also important to make yourself aware of the payroll basics so that there will be no issues and challenges in the future.
First of all, if you want to have an employee for your business, it is a must for you to pay the employee correctly. Some businesses would settle for a monthly payment for easier payroll, others would like to have it bi-monthly. You also have to ensure that you have to make the necessary deductions from the monthly salary and pay this to the HRMC. This is a legal requirement, therefore it should be implemented.
The PAYE or Pay As You Earn process is a system that the HRMC uses to collect Income Tax and National Insurance Contributions to employees. Employers are the ones liable if appropriate deductions are not made. This is for the government to use. With this, employers should also be receiving a statement/pay slip that reflects all the deductions made from their salary.
During the hiring process, it is important to request for the employees’ tax code and National Insurance Number. With this information, you can calculate the amount of tax and NI to deduct. It is recommended to use payroll software to avoid errors in calculating all these deductions. It is also recommended to use electronic software to make payments so that you can make sure the payment will be delivered safely to HRMC.
Also, always take note of the dates when to send payments to HMRC:
· Every 19th day of each month – pay by post
· Every 22nd day of each month – pay electronically
And lastly, you need to be able to have all the necessary payroll forms for you to successfully send payments to the HRMC. These forms have four categories: Employee forms, Start of the Tax Year forms, Payroll Administration forms and Expenses and Benefits forms. These forms will give you all the information you need to operate PAYE correctly. After these forms are filled up, you need to submit these to HRMC at various points throughout the business year and employee life cycle.
Good payroll software can save you from all of these since you will be able to generate and file these forms and returns online with HRMC. This is also to ensure you will not miss any deadline or payment.
Now, I’d like to ask this question: Are you ready to pay for your first employee?
You do not need to worry. Eclat Accountancy Ltd offers the best accounting services that suit your needs. Visit www.eclataccountancy.co.uk if you need help with accounting services.