As a business owner, there are a number of rules and regulations that you need to consider regarding the payroll for your employees.
There are also certain payroll responsibilities that you have as an employer. It is important to be aware of these responsibilities and to understand them all in order to prevent being fined by the HMRC and to ensure that all your employees are paid correctly and on time.
What is payroll?
Payroll services serve two functions. The first function involves paying your employees for the work they have completed and ensuring that they are paid any bonuses, overtime and statutory payments, such as maternity pay or sick pay. The second function of payroll is to deduct the money each employee owes in taxes, national insurance, pension contributions and student loan (if applicable). PAYE (Pay As You Earn) is the system operated by HMRC to collect income tax and national insurance contributions from employees. As an employer, you will have to run PAYE as part of your payroll. There are certain circumstances where you will be exempt from running PAYE, but even if this is the case for you, you must still keep detailed records of your payroll.
How does payroll work?
Every month, on each payday, your business will need to notify HMRC of all payments and deductions via a report. The payroll software you use should be able to complete all the calculations for you regarding how much each employee has to pay in tax or national insurance. Once this has been calculated, you can then apply to HMRC for reductions in your HMRC bill for anyone claiming statutory pay, such as maternity pay. It’s also important that you notify HMRC of any new employees or any job changes within your business. You need to do this within the month that a new employee starts working for your company. Typically, most business owners pay HMRC monthly, but is it also possible to arrange a quarterly payment if you are paying less than the threshold of £1,500 a month. At the end of each tax year, you must prepare an annual report for HMRC outlining any employee expenses and benefits, some of which may be taxable, issue P60s to your employees, and make financial preparations for the following year.
How can Berley help?
The payroll process can be very complex and there are many recurring responsibilities that you, as an employer, must be aware of. As a business owner, you are also legally responsible for completing all of the PAYE functions within your company. As chartered accountants, Berley can provide you with the support and advice you need to set up a useful and efficient payroll service. You can outsource your payroll to us and we will ensure that it is prepared monthly, as well as completing all PAYE responsibilities on your behalf. If you would like to find out more about how Berley can help you with your payroll, call us today on 020 7636 9094.