DOING PAYROLL FOR YOUR BUSINESS IN LONDON

    0
    261

    Payroll done correctly can help your business immensely. Paying the staff the correct wages and salaries are essential in running a business in the long term. Incorrect disbursal of money is one of the root causes of high attrition rates in small and medium-sized enterprises. Most large companies have teams that calculate precise salary disbursement. Deductions, interests, employee pension schemes, and other taxes are crucial when doing payroll for your workforce.

    If you get the payroll amount wrong, the company might be charged financial penalties from the HMRC (Her Majesty’s Revenue & Customs) UK and also have plenty of irate employees. Paying all staff their rightful wages is mandatory as per law and is also your responsibility as a moral and upright business owner. To do payroll correctly in the UK, it is imperative that you know and understand all the rules and regulations. Abiding by these rules is vital for a happy and productive workforce.

    There are several things that you need to know (as a business owner) about payroll. Let us cover the basics.

    • National Living Wage: While the UK has a Minimum Wage per person, it also has a National Living Wage for persons above the age of 25 years and over. This wage rate changes according to the age of the employee, and can change every April with the Fiscal Year changeover.
    • UK Employment Law: It is best practice to have professionals look over the Employment Law since UK law has significant distinctions between workers, employees, and the self-employed. Under UK law, employees have greater rights than businesses. Seek professional help for payroll services from Crunch to help with Employment Law since employment tribunals can be expensive and long-drawn affairs.
    • UK Working Hours: According to the work-time directive, employees in the UK can opt for 48-hour a week shifts, or can work 40 hours/ week. The average hours worked per employee are calculated over a period of 17 working weeks.
    • National Holidays: Bank holidays, religious holidays (Good Friday and Christmas Day), and Royal Weddings are considered National holidays in the UK. Since banks may be closed, the working population may receive pay without work or extra pay for work done on these days.
    • Employee Contracts: All the employees must have Employment Contracts with your business. These contracts act as proof of engagement, employment, duties, responsibilities, and rights. UK residents should submit form P45 from the previous employer for all taxes and deductions. In case of a new employee or fresh graduate, as a business owner, you would have to approach the HMRC for the correct tax code.
    • Statutory Payments: Sick pay, maternity pay, paternity pay, adoption pay, are all mandatory by law and should be processed with the payroll.

    There are other basics such as the Pay As You Earn (PAYE), Brexit laws, Tax rates, National Insurance, Auto Enrolment and other Statutory payments that you would need to know as a business owner to calculate correct payroll. As mentioned earlier, it is best to consult and outsource a professional to do payroll for your business.

    How you can set up your Business for Payroll:

    Once you decide to do the payroll yourself, it is essential to complete a few tasks before paying your employees their first salary.

    You will first need to register with the HMRC as an employer. You will have a business login and a login for PAYE Online.

    With these services, you can appeal for penalties, access tax codes of all your employees, send payroll reports directly to HMRC, get alerts, and also register for email reminders to get ahead of your payroll.

    Once done, you can invest in software, or outsource the payroll to a professional company to record all employee details, calculate all payments and deductions, and generate reports for the HMRC.

    HMRC Compliance:

    As with most legalities, there are several things to consider:

    • Reports: It is essential to send timely payroll reports via the company PAYE login. You can also send reports through the business payroll software by entering the PAYE details.
    • Late Reports: HMRC will send a late filing report in case you forget to file employee payroll records. HMRC may also charge a late penalty that can cost more than £100 a month and can go as high as £500.
    • Pay company dues: As employers, it is mandatory to pay all Class 1 National Insurance through the company PAYE Online bill portal. The amount the business is paying is directly proportionate to the amount earned by the employee.