Setting up payroll for the first time

You’re starting a business and recognise the need to take on employees to help you share the load, but paying them in cash isn’t an option as you’ll be breaking the law.

You usually need to register to pay income tax and national insurance contributions (NICs) through Pay As You Earn (PAYE) in order to remain in HMRC’s good books.

Payments to your staff members include any wages, tips or bonuses and things like statutory sick and maternity leave.

It’s from these payments that income tax and NICs will be deducted, while you also need to consider if an employee meets the criteria for student loan repayments and workplace pension contributions.

Register as an employer with HMRC

Usually, the first step to take when you employ staff or take on subcontractors for construction work is to register as an employer with HMRC.

It will take around 5 days for you to receive your employer number from the Revenue, and make sure you allow enough time as this task must be completed before your business’ first payday.

Should you adopt payroll software or outsource?

The next decision to make is to consider whether or not you want to run payroll yourself, in which case you’ll need to invest in HMRC-recognised software if you employ more than 10 workers.

If you don’t fancy taking on the monthly burden of running your own payroll, the alternative would be to outsource your payroll needs to our team of experienced professionals.

We offer a confidential and cost-effective service that includes all payroll tasks and will free up valuable time and resources to reinvest into your business.

Collect accurate records to comply with payroll

Whether you run your own payroll or outsource it to us, it’s imperative to collect accurate records and keep them for 3 years after the end of the tax year they relate to.

You must keep records of:

• what you pay your employees and the deductions you make
• reports and payments made to HMRC
• employee leave and sickness absences
• tax code notices
• taxable expenses or benefits
• payroll giving scheme documents.

The Revenue may check your records to make sure you’re paying the right amount of tax.

If you don’t keep full records, HMRC may estimate what you have to pay and charge you a penalty of up to £3,000.

Get in touch

We offer a comprehensive payroll service as an area of specialism, including making the correct deductions through PAYE and paying the right amounts of tax and NICs to keep you compliant.

This includes navigating the choppy waters of auto-enrolment, which changed for 2018/19 and will increase again on 6 April 2019.

You can call us on 01363 773191 or drop us an email at info@stapletonsaccountants.co.uk for more information.

We can run your business’ payroll obligations.