If you’re taking on your first employee, or employees, then you’re going to have to get used to the idea of running a regular payroll to pay your team’s salary.
This may sound daunting, at first, but in reality the process of setting your business up to run a payroll is fairly straightforward when you have only a few employees.
- Register for PAYE – Firstly, you’ll need to register for pay-as-you-earn (PAYE) with HM Revenue & Customs (HMRC). This allows you to deduct the necessary income tax and National Insurance (NI) from your employees and pay these to HMRC. Find out more about registering for PAYE here.
- Get a payroll system – Secondly, you’ll need payroll software to actually run the payroll and link it to your bank accounts and accounting software. We’d advise using Xero online accounting – this is cloud accounting software that comes with payroll included as standard, rather than as a costly additional module. Xero Payroll will cost you as little as £1 per month, per employee.
- Set up your business information – To set up Xero Payroll you’ll need your PAYE reference number and accounts office reference numbers. Both of these references will be included in the same PAYE registration letter that’s posted to you once you’ve registered online. This information is needed so HMRC knows which business is paying PAYE and NI and can account for it accordingly.
- Set up your employee information – You’ll need to set up the software with the necessary information about your employees, including detail like names, ages, contact details, salaries and pay rates etc. These records will help you work out the right pay, address their payslips to the right place and work out if employees are eligible for things like auto enrolment and Statutory Maternity Pay etc.
- Work out if your payroll will be run in-house or outsourced – You’ll need to decide if you’re going to run your payroll yourself, or if you’re going to work with a payroll specialist to outsource this business task – you can find out more whether to opt for in-house or outsourced payroll here
If you need help setting up your payroll, or you want to outsource your payroll to an expert, give us a call on 01454 300 999, or drop an email to firstname.lastname@example.org