Payroll / PAYE for start-ups is an essential function within every business. Payroll is the process that matches workers with their wages. If payroll gets off track, things can go very wrong very quickly. So you definitely want to avoid errors within payroll / PAYE for start-ups whenever possible.

Payroll / PAYE for Start-Ups

Avoiding errors within your business payroll helps you to retain trust and commitment among your employees, as well as support your business’s record keeping and cash flow forecasting. When you form your own business there are certain challenges associated with managing payroll / PAYE for start-ups. Fortunately we can help businesses of every scale to navigate the Pay-As-You-Earn (PAYE) system. Here is everything you need to know.

Employee Versus Contractor

An employer is responsible for classifying employees correctly. It is important to understand the difference between an employee and a contractor, since this can have legal implications due to IR35. IR35 is anti-avoidance tax legislation designed to assess whether a contractor is a genuine contractor rather than a ‘disguised’ employee, for the purposes of paying tax. An employee is a worker who you hire and pay regular wages to. Their workflow is controlled by their employer and they have entitlements such as paid holiday allowance. An employee also has their NICs paid by their employer. By comparison a contractor is a worker who may run their own business but also performs work for other businesses. The worker is in control of their own workflow, they can choose which contracts to take for example, plus they are responsible for their own equipment and supplies. They are also responsible for paying their own taxes. Contractors who work through their limited company enjoy a level of tax efficiency. While they don’t usually get employee benefits like holiday and sick pay, plus they will be responsible for their own contractor insurances.

Payroll-Related Deadlines

Sidestepping payroll mistakes is one of the best ways of saving your business money and time while maintaining employee security. This sounds simple but maintaining an awareness of payroll / PAYE deadlines is essential for both paying your workforce on time, avoiding problems in their personal cash flow and the cash flow of y9ur business. Imagine you overlook an upcoming bank holiday, if the employee’s wages hit their account a few days late because of this oversight, they risk going into arrears with their own mortgage payment for example. This is just one reason why Payroll / PAYE deadlines matter so much. One way to avoid such a glaring mistake is to use fully serviced payroll software, or outsource payroll / PAYE for start-ups to your professional accounting firm altogether. 

Calculating Employees’ Pay

This is an easy mistake to make. There are a number of costs and deductions to take into consideration when you process employee payroll / PAYE, not least NICs, employee expenses, or bonuses or overtime. Make sure that all of these are covered comprehensively by the contract that you have drawn up for your employee. Then make sure that this is accurately reflected in your payroll / PAYE processing software by classifying your employees and contractors correctly. Generally the costs associated with employing staff are deductible from the profits of the business. However there are some costs to bear in mind when you process payroll. 

Limited Company

Limited companies, by law in many instances, must be registered for PAYE. This means there is a legal obligation to operate a full payroll system – this obligation also means companies must produce itemised payslips along with end-of-year filing with HMRC.as a start-up you can find out more in our handy Guide to Self-Employment versus Limited Company

Payroll Agent 

Prestige Business Management understands these complexities in depth and we can help inform new start-up ventures about the process surrounding payroll and the statutory obligations that befall on all UK employers. Prestige Business Management to act as your payroll agent and undertake the full spectrum of payroll duties – from calculations to cycle monitoring and compliance checks. This means you can rest assured that your payroll obligations are being met by a professional team of payroll / PAYE for start-ups specialists at Prestige Business Management. Our team can help create a custom payroll solution that fits your business needs specifically by tailoring the right solution to your specific business case needs. Whatever business or sector, we can create the right payroll solution for your continued business success.

Prestige Business Management Works for You 

Prestige Business Management can remove the pressures of payroll whilst you focus entirely on your start-ups’ success. By leaving payroll to Prestige Business Management, you can save money and focus on your business. Find out what we can do for you. Call us today on 0203 773 2927.