Maintaining compliance with employment laws and regulations is facilitated by setting up a well-organized payroll system. Also, you won’t have to worry about HMRC penalties or losing time.
So, follow these steps to set up and manage payroll for your business.
1. Register Yourself as An Employer
After deciding to hire someone, the first thing to do is to become registered as an employer with HMRC. After registering, you’ll be assigned an employer reference number and an Accounts Office Reference number.
To sign up for an HMRC online account, please use these.
2. Select the Optimum Payroll Software
When establishing a payroll system for your company, it is vital to select reliable payroll software capable of accurately tracking employee information and computing salaries and applicable deductions.
3. Maintain Regular Payroll Records
You should gather and update information on the following:
- The salary structure and deductions you use to compensate your employees
- Preparation of HMRC-submitted reports
- Payments to the HMRC
- Worker sick leave and other absences
- Costs and advantages that are subject to taxation
- Tax code and notices
- Payroll providing scheme documents
HMRC payroll training can help you learn more about it.
4. Gather Information About New Hire
When you onboard a new employee, it is your responsibility as an employer to notify the HMRC. Verify if PAYE is required for employee compensation.
Unless the independent workers or contractors are subject to IRS35 laws, you are not required to pay them via PAYE.
5. Don’t Forget Pension Contributions
A workplace pension plan is a legal requirement for all employers. Add this to your total so that your computations and the employee contributions are precise.
6. Send Payroll Reports Regularly
No matter the proportion of income tax that is payable, businesses must provide payroll details to HMRC. Your payroll system should be able to facilitate this through the use of FPS.
7. Avoid Reporting Delays
Failure to report on time is not tolerated. If you have paid employees but have not submitted an FPS or just sent one late, HMRC may issue a warning or levy a penalty. So report on time.
8. Settle Your Bills
Employers are responsible for contributing to National Insurance through their PAYE bill. The amounts that you pay depend on the employee’s income.
Consider enrolling for the finance for non-finance managers certificateif you come from any other background.
Visit Cudoo to explore HMRC payroll courses and commence your learning journey online.