I was recently asked what advice I’d give somebody who is starting a new business and hiring his or her first employee. As you’d probably expect from someone whose business is payroll software, my answer was about the importance of organising your payroll.
When hiring your first employee, there are many things to consider, such as the employee’s role, the pay rate and how best to recruit. Once you’ve found the right person, it is vital that you organise your payroll.
If you have employed someone before 2013, you may have registered with HMRC, worked out the deductions, paid your employee and then simply sent the figures to HMRC at the end of the tax year. You would have deducted tax and NI and produced payslips, but it was quite possible to do these things manually. However, if you hire someone today, and you pay them more than £113 per week, and you don’t qualify for the limited exemptions, you will need to send the information to HMRC in real time.
Sending employee information in real time, also known as Real Time Information, means that every time you pay an employee, you must send details to HMRC straight away – you can’t even wait until the next day.
New employers have many duties, some of which are more urgent than others. For example, you will probably have to supply written terms of employment and enrol your staff into a pension; but, unlike Real Time Information, these duties don’t have to be completed immediately and can wait until the following day.
Fortunately, there are lots of options to help you with Real Time Information, including cloud payroll systems like ours, free downloadable tools and, of course, your trusty accountant.