A New Responsibility
Taking on your first employee is an exciting milestone, but it comes with new responsibilities. Getting payroll right from the start is important — not just for compliance, but for building trust with your team.
Registering as an Employer
Before your new employee starts, you need to register as an employer with HMRC. This gives you a PAYE reference number, which you will need for all payroll submissions. Your accountant can handle this registration for you.
Running Payroll and RTI
You will need to run payroll on each pay date, calculating income tax and National Insurance deductions. These must be reported to HMRC in real time through RTI (Real Time Information) submissions. Late or incorrect submissions can result in penalties.
Auto-Enrolment Pensions
Auto-enrolment is another obligation. Within a set period of your first employee's start date, you must set up a workplace pension scheme and begin making contributions. The minimum contribution is currently 8% of qualifying earnings, with at least 3% coming from the employer.
Payslips and Record Keeping
Payslips must be provided to your employee on or before each pay date. These should show gross pay, deductions, and net pay. Most payroll software generates these automatically.
Year-End Reporting
At the end of the tax year, you will need to provide P60 forms to your employees and submit a final payroll report to HMRC. If you provide any benefits in kind, you may also need to file P11D forms.
Why Outsource Payroll?
Many small businesses choose to outsource payroll to their accountant. It removes the administrative burden, ensures compliance, and means you always have an expert to call if questions arise.
Need advice on this topic?
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