If this is the first time you have had to think about paying employees, payroll can be a daunting thought. There is quite a lot of pressure to make sure you are doing everything correctly to ensure employees are being paid the right amount, tax and national insurance are taken off and paid, pension schemes are taken care of, and payslips are sent.
We have put together some of our top tips to help you perfect your payroll.
If you have even one employee, you need to set up your PAYE scheme so you will be given an employer PAYE number. Once you have received your number, you will use it to identify yourself to HMRC. Please note that it can take up to anything between 5 days to 5 weeks or more, (depending on HMRC’s backlog), to receive your PAYE number for the first time, so don’t leave it to the last minute.
Employers Liability Insurance
If you are an employer, you must have Employers Liability Insurance for at least £5m. This isn’t just guidance, but is actually a legal requirement and an important expense to consider when thinking about whether to start employing staff.
You need to keep HMRC well-informed of any changes in staff including when you hire a new employee or an employee leaves the business. When bringing on someone new, they will need to provide you with their P45 from the last job so that they are taxed correctly. Failure to do this means they will be put on an emergency tax code which could result in the employee being overtaxed.
Minimum Wage Rules
Minimum wage and national living wage is changing on an annual basis. It is very important that you keep yourself informed of the latest changes, and when to expect an increase – especially if your staff are on minimum wage or just above it. You should always factor this in when planning to employ new staff members.
Employees are due a minimum number of holidays. If they work full time, then the minimum requirement is 20 days plus bank holidays. If they work variable hours, then the calculation can be more complicated as you need to take the average of hours worked up to two years previously. This means that you have to keep track of the hours worked as you go so that this average can be calculated. Find out more about holiday entitlement here.
If your employee earns at least £10,000 a year, and are aged 22 and over, they should automatically be enrolled into a workplace pension scheme. It is your responsibility to do this, as their employer. However, they do also have the right to opt out if they choose to do so.
One of our biggest tips for keeping your payroll running smoothly is to make yourself a payroll calendar. Within the calendar, you should make a note of the following:
- Pay dates (whether that’s weekly, fortnightly or monthly)
- Book out time for creating and sending out payslips
- Reminders for sending your RTI Submissions to HMRC
- Payment dates of tax and NI to HMRC – this might be monthly or quarterly
- Annual P60 deadline
Need help with your payroll?
If you employ staff, it can be difficult to get your head around everything you need to do in order to comply with laws and guidance. We offer a payroll services to assist you in creating wage slips, paying tax and making sure everything is running smoothly.
At Turas Accountants, we do our very best to inform and guide you through every process of running a business. Our team are on hand to help you with any query you may have. If you’re unsure on what you need to do this financial year, get in touch with us today.