Pro-Tax Guide: 5 Payroll Tips You Should Know
Owning a business in the UK is a blessing and responsibility indeed. If you are an owner, you should be well-aware of the rules and regulations of payroll and taxation. HMRC can charge you a penalty if you miss any of the rules without valid reasons. People often find these rules complex and difficult to understand. It is suggested by tax experts to consult professionals for tax advice. Saving up on the fees of professional consultancy can cost of heavy penalties and you will end up with more harm than good. While you prepare payroll, you need to be considerate of important dates. Payroll preparation has been made quite easy with many software. Pick what suits you best and save your company from paying extra money to the Government. Every new employer should get a PAYE scheme to properly pay all the taxes. Who could give better advice on payroll than a tax professional? Here are 5 payroll tips from experts. Implementing this piece of advice can make a huge difference in the long-term success of your business. 1. Stick To The Deadlines HMRC has provided specific deadlines for every task and they must be given due respect. When you run a business, missing a deadline is deadly. It is going to cost you money and if you keep on repeating the mistake, you may end up in jail. The tax month starts from 6th of a month and ends at the 5th of the next. And the cycle goes on. The complete record of pay and deductions is sent to HMRC. This information is named Full Payment Submission (FPS). You can check what you owe from FPS from 12th to 19th of that month. If you review the balances and need to file a claim, do so within two days. If you pay by post, send it till 19th of the month whereas online payments must be sent till 22nd. 2. Provide All Of Your Employees With P60 Forms Sticking to the monthly dates is going to ease up things at the end of the year. Even then, there are certain things to be done at the year-end. The most important of which is to provide P60 forms to your employees up to May 31. The final day of the tax year is 5 April but all of your employees and workers must receive their P60 forms on time. prepare ahead of the time unless you may face difficulty in managing forms at the last moment. This essential document summarizes complete information about the pay and deductions. If you pay monthly, the payroll will be prepared normally. Payroll preparation differs if you pay them weekly, fortnightly or four-weekly. In this later mentioned case, you will have a week 53 if your pay date falls exactly on 5 April. Be considerate of such minor changes. 3. Keep Record Of Leavers Who would like to pay extra taxes for the people who have left the job? Check if any of the workers or employees have left. You must be aware that workers and employees are two different terms. Workers are the people working on contracts whereas full-time employment makes you an employee. Report the leavers while you process the year-end FPS and Employment Payment Summary (EPS). 4. Keep Up With PAYE UK Government has introduced a system for paying income tax and national insurance contributions which are known as Pay As You Earn (PAYE). Tax professionals are well-versed in tax codes to work smoothly with PAYE. Remember to deduct tax on the tips. It is a bit unnerving for people to get their tips taxed but it is included in the tax code of HMRC. Either the worker is getting it individually or a there is a tronc-master, tax deductions are a must. 5. Use Payroll Software As it is already mentioned, the software allows easy payroll processioning and tax planning. Even a CA professional relies on payroll software. If you have 10 or fewer employees you can work with free software whereas more employees mean you need to buy HMRC attested software.