So, your business is doing well, eh? Growing faster than a whippet down the quayside? That’s mint! But with growth comes a few more things to keep in mind. One of the biggest is employing staff. You’ll need to get your head around setting up payroll, making sure wages are sorted, and keeping on the right side of HMRC.
Sound like a faff? Aye, it can be, but don’t worry – we’ll walk you through the basics.
Why employing staff isn’t just a pint and handshake
It might seem easy, bringing someone on board, but there’s a bit more to it than agreeing on a wage and cracking on. When you take on staff, you’re responsible for their pay, taxes, and National Insurance. It’s your job to make sure you’re doing it right, or HMRC will be on your back faster than a dog after a sausage!
First up, you’ll need to register as an employer with HMRC. You’ve got to do this before the first payday, so no dragging your feet, eh? Once you’ve sorted that, you’ll need to decide how you’re going to run payroll. Are you gonna handle it yourself, or are you going to hire someone (like us, maybe) to take care of it? Either way, you’ve got to make sure it’s done properly – payroll’s not something you want to mess up. People need paying!
The ins and outs of PAYE
Now, let’s talk about PAYE (Pay As You Earn). It’s how you collect Income Tax and National Insurance from your employees. Basically, every time you pay your staff, you’ve got to calculate how much tax and NI they owe, take it off their wages, and send it to HMRC. You’ll also need to pay employer’s National Insurance contributions, which is currently 13.8% on earnings over £175 a week.
If you’ve got people earning less than £12,570 a year, they’re not paying Income Tax, but you’ll still need to keep records and report to HMRC. The rules are always changing, mind, so make sure you’re up to date with the latest figures.
Pensions – aye, you’ve got to sort that too!
Right, once you’ve got payroll sorted, there’s still more to do! You’re legally required to offer a workplace pension to your employees. Auto-enrolment means that anyone aged between 22 and the State Pension age who earns more than £10,000 a year needs to be automatically enrolled into a pension scheme.
You and your employee will both contribute to this. The minimum total contribution is 8% of their wages, with you putting in at least 3%. Don’t be skimping here – this is a legal requirement, and not doing it will land you in bother.
Sick pay, holiday pay, and all that jazz
When you’ve got staff, you’ve also got to think about sick pay, holiday pay, and maternity/paternity leave. Statutory Sick Pay (SSP) is £109.90 a week for up to 28 weeks – as long as they’re off work for at least four days in a row. Your staff are also entitled to at least 5.6 weeks of paid holiday a year – and that’s a minimum, not a target.
For new parents, you’ll need to offer maternity leave of up to 52 weeks and paternity leave of up to two weeks. Statutory Maternity Pay (SMP) is 90% of the employee’s average weekly earnings for the first six weeks and then £172.48 or 90% of their weekly earnings (whichever’s lower) for the next 33 weeks. Statutory Paternity Pay (SPP) is the same £172.48 a week or 90% of their average earnings, whichever is lower.
It might seem like a lot to get your head around, but the good news is that most of it can be reclaimed from HMRC, so you’re not out of pocket. But aye, it’s still more admin to deal with!
Preparing wages – more than just writing a cheque
Getting payroll set up is only the beginning. You’ll need to stay on top of things every payday. That means making sure everyone’s being paid on time, that all the deductions are right, and that you’re submitting your Full Payment Submission (FPS) to HMRC on or before payday. Miss this, and you’ll face penalties faster than you can say “tax bill”.
The key is to have a good system in place. Whether it’s payroll software or someone doing it for you, it’s got to be efficient and accurate. Get it wrong, and not only will your staff be unhappy, but you’ll also have HMRC breathing down your neck – and trust us, that’s not what you want!
The benefits of getting payroll right
It might sound like a hassle, but getting your payroll right brings some proper benefits. First off, it keeps your staff happy. Nobody wants to work for a boss who messes up their wages, right? And happy staff means more productivity, better morale, and lower turnover – all good things when you’re trying to grow.
Then there’s the legal side. Keeping your payroll in order means you won’t have to worry about fines, penalties, or investigations from HMRC. That’s one less thing to stress about: which means you can focus on growing your business.
Finally, a solid payroll system can help you plan for the future. Knowing how much you’re paying in wages, tax, and National Insurance can help you budget and forecast more effectively. And if you’re looking to take on more staff, you’ll know exactly what you can afford.
Aye, it’s a lot – but you don’t have to do it alone!
If all this sounds like it’s going to take up a bit too much of your time, or you’d just rather focus on running your business, then let’s have a chat. For The Trade can take care of all this payroll malarkey for you – from registering as an employer to running the payroll and sorting out the pensions. We’ll make sure everything’s done right, so you can get back to doing what you do best. Give us a shout, and let’s see how we can help.
After all, running a business is hard enough without worrying about whether or not you’ve paid your staff right!
Give us a call, and we’ll help you answer any questions about your growing business.