Becoming a boss for the first time is an exciting time, but it also means that you will need to learn the ins and outs of payroll. Having employees brings more responsibility, but it also means more administration; HMRC will need figures reporting to them each month. As soon as you start employing staff, you will need to register yourself as an employer with HMRC.
What You Need To Report
Firstly, you need to register as an employer before the first payday, as the process can take up to two weeks. With every payday, you need to report the amount, any tax deductions, and your national insurance contributions. You must also produce a payslip for each employee every month. Additionally, all payments should be on a trackable system; this is a legal requirement.
Pay As You Earn (PAYE)
PAYE is HMRC’s system which most employers will use. The system collects tax payments, national insurance, and student loan repayments, and it also deals with pension contributions. You will get a bill each month based on what you owe, but you don’t need to use the PAYE system if none of your employees earn more than £112 a week.
What to Include in Your Payroll Records
You need to record what you pay them, what deductions have been made, any taxable expenses, and any benefits. You must also keep a record of any annual leave and/or sickness. You should keep hold of your records for three years, from the end of the tax year that they relate.
HMRC has a dedicated payroll software system that employers can use. However, you can always ask a professional to do it for you. This will mean less stress, and it will also give you more time to work on your business. If you are a new employer and would like an accountant to do the job for you, please get in touch to see how we can help.