Running your first payroll may seem like a daunting task but we’ve compiled the basics to ensure that you’re conducting yourself correctly and legally.
- Register yourself as an employer
When you take on your first employee, your legal rights and responsibilities immediately change.
One of the first things you must do is register yourself as an employer with HMRC at least four weeks before you plan to pay your first employee.
Remember, if you’re a sole trader and employing only yourself, you still need to register as an employer.
The only exception to this is if your staff earn less than £122 a week, £486 a month or £5,824 a year.
- Calculate deductions
When running your payroll, it will be your responsibility to calculate the monthly deductions for your employees.
Deductions that always need to be included are National Insurance, tax and pension contributions.
Additionally, some employees will require student loan repayments, child maintenance payments and donations.
- Create a payslip
If you’re running payroll, one of your legal responsibilities is to provide employees with a payslip on or before payday.
Your payslip must include the pay before deductions, deductions and pay after deductions.
As for payslip distribution, you have two options, either print and post the payslips or send them electronically via a secure online platform such as our OpenPayslips module.
- Make sure you report your payments to HMRC
You need to inform HMRC of all your Full Payment Submissions (FPS), stating what you’ve paid and the deductions you’ve made.
Your PAYE reference and Accounts Office reference will be required, and the report must be sent before payday.
- Send your payment to HMRC
Each payroll you must pay HMRC what you owe them either by the 19th if you’re using post and the 22nd if you’re doing it online.
If you fail to pay HMRC on time you will be susceptible to a fine which is usually an interest of 2.7% for every day you’re late.
How can 12Pay help
Now that you have the basic information to run your first payroll, you need to ensure you have a reliable payroll software in place.
12Pay is our easy to use platform that offers a simple and quick way for you to run your payroll, streamlining the entire process to save you time and resources.
Packed with functionality regardless of which package you choose, 12Pay provides speciality software tailored to small-and-medium-sized UK companies.