You’ve done it, you’ve started your own business, maybe you’ve even already got a healthy customer base going, but the time has come to take on some help so your business can continue to grow. It’s not as simple as submitting a vacancy to an online job site and hiring the best fit, there are several legal considerations to becoming an employer, and lots of admin too, not least the all-important payroll. To make sure you get set up properly for hiring your first member of staff, we’ve put together a handy guide, read on to find out how to set up a business payroll. Our educational guide should point you in the right direction, but you should always consult a professional on issues that might be specific to your businesses.
Register as an employer
You must register as an employer on the Gov.uk website. This must be done before the first payday of your new employees, but cannot be completed earlier than 2 months before this date.
If you have a candidate ready to start then you can register right away, otherwise, it would be wiser to advertise the job position and register when the search process is over and you’ve decided on a candidate, as this can often take several months.
Register for PAYE Online
If you registered your business online, you should be sent login details for PAYE Online, the HM Revenue and Customs (HMRC) service for paying employees.
If you registered your business some other way, you will need to register for PAYE Online separately. Again, you should time this to correlate with the progress of your hiring process, as it can take 10 days to complete your registration.
Get information about your new hire
Most of the information you need about your new employee will be on their P45. If this is not available you can use HMRC’s ‘starter checklist’ which has replaced the P46. Details in this document will include things such as any student loans, which must be reflected in your payroll details.
Decide who will manage PAYE and organise a schedule
If you feel confident in handling payments then you can run your company’s PAYE yourself, but this is a task also able to be handed over to an agency or accountant. If you do decide to keep this process in-house, then make sure you have processes worked out so that the operation can run smoothly each month. Your processes should also include key dates in the year like year-end PAYE tasks, P60s and the maintenance of employee payment information.
Be clear on the law
You should be fully versed in the laws of employment, including holiday pay, overtime, maternity and paternity leave and compassionate leave. Have these clearly documented somewhere, as well as the processes needed to induct a new employee into the company.
Remember benefits, bonuses, expenses and tax
All these need to be considered when calculating an employee’s pay, expenses are commonly completed before payday each month and are also taxable, so have a clear deadline for when all employees should submit theirs and add this to all payroll information.
Other taxes like National Insurance must also be paid to HMRC. This should all be calculated, reported and submitted to HMRC before or on your first payday as an employer.
Don’t forget about your pension contributions
All UK employers need to offer a workplace pension, so make sure you add this to any pay, ensuring that employee contributions as well as your own are accurately calculated. Pension contributions are a legal obligation so you must include them.
Get helpful software
With all these things to take into consideration, it’s important to pick software that can help you keep organised and properly scheduled.
Xero, one of Square’s app partners, is an easy-to-use powerful tool to help you manage accounts, payroll, expenses and employee payments. And because it’s a Square partner, you can easily control all other financial aspects of your business from its user-friendly interface.
Online resources such as salary calculators can also be helpful for calculating income tax and take-home salary.