Edinburgh Accountants Allsquare will help you set up a time-saving & reliable payroll system which benefits both your company and employees
The word “payroll” conjures up images of huge, old-fashioned computers churning out salary slips, while an army of accounts clerks checks the calculations. Many modern businesses find the whole thing completely off-putting. But it needn’t be that bad. Let’s look at what payroll actually means.
The key point about payroll is PAYE. This is where you deduct the tax that your employees owe the government, and pay it to Her Majesty’s Revenue and Customs (HMRC) on their behalf.
If your employees earn less than £112 a week, if you don’t give them expenses and benefits and if they haven’t got another job or a pension, you don’t need to bother. You have to keep records (no surprise there), but that’s all.
If that’s not true of your business, the payments to your employees are going to include their wages or salary, any bonuses they have earned, and statutory sick pay or maternity pay. Then in most cases, you have to deduct tax and National Insurance, student loan contributions and possibly pension contributions. Needless to say, there are multiple exceptions. It may be becoming clearer why many small and medium sized businesses simply outsource their payroll to an accountancy firm, that runs payroll services every month for lots of businesses, using their own software.
As a business owner, you don’t have to worry what changed in the last budget. Your payroll services provider will do this for you, and for everyone else for whom they run payroll. This can remove a huge burden for the small business owner. As an example, if the business has paid statutory sick pay, it then has to remember to reclaim it.
There are some concessions for small employers. For example, if your payroll amounts to less than £1,500 a month, you can ask HMRC if you can pay quarterly. However, employees’ circumstances can change constantly, and HMRC needs to be informed whenever a significant change happens, such as an employee reaching state pension age. If you have a professional adviser for tax and payroll, they can do this on your behalf.
HMRC are quite happy for the business owner to choose an accountant or bureau to run their payroll. However, they do caution that before putting this kind of arrangement in place, you need to be aware that you’re not outsourcing all of your responsibilities. You are still responsible for recording the details of your employees, and for proper record keeping. You’re also legally responsible for all of the tasks to do with PAYE – even if you are paying a firm to do this on your behalf.
The process for registering and setting up a compliant system is not entirely simple. If you can find a transparent and sympathetic firm that provides these services, you are well advised to use them. The fact is, they will be doing this for lots of businesses, whereas you’d be better employed doing what you do best – running your business.
Payroll needn’t be an oppressive monthly chore if you get some help from professionals who understand your specific business. Try All Square, who offer simple, transparent solutions that let you stay in the driving seat – call 0131 343 1510 today!