Coleman Bradshaw

Thinking of taking on an employee?

As your business grows it is quite likely that you will need an extra pair of hands, whether this is your partner helping you out with your paperwork for a few hours a week, or a full time labourer, apprentice or office staff.

This can be a daunting time -

  • Does your employee have to pay tax?
  • Or national insurance?
  • How do you work this out?
  • What does it cost you?
  • What does their tax code mean?
  • How about holiday pay?
  • And sickness?
  • The list goes on.....

Thankfully we are here to help, from giving you general advice on any of the above through to taking it all off of your hands and sorting it out from our end.

All you have to do is write the pay cheques - we don't go that far!

Employed or Self-Employed

Once you have taken the decision to take on an extra pair of hands you then need to think about whether they are an employee after all. They could be self-employed for example, in which case rather than you give them a payslip they would send you a bill! This takes much of the paperwork burden off of you (or us!), but not surprisingly the taxman is not always keen on the idea, and has devised a myriad of rules that define whether someone is employed or self-employed.

Before taking this decision we strongly recommend that you give us a call to discuss it further, as we can tell you what we think the taxman is going to think, and what steps you could take to make him think differently!

The next step

Ok so on this occasion you are taking on an employee, who is not self-employed, so what do you do next? You've agreed an hourly rate and how many hours they are going to work, but how do you know what to pay them? Or how much tax & NI to deduct? And when to pay that over to the taxman?

The first thing you need to do is set up a PAYE scheme, so the taxman knows that you are employing, and why you keep sending him money every few months! This is just a phonecall, and we will do it for you as part of our payroll service.

You'll receive a starter pack telling you everything you need to know about administering a payroll, and within this you can find answers to all the questions above, plus tools and calculators that help you around the tricky sums and to keep a written record.

Throughout the year

Every week, or month, your employee will want paying (greedy sod!). If their wage is £150 a week say, you'll pay them about £130 and keep £20 back to pay over to the taxman. Every three months, or every month if you've got a lot to pay, you'll need to add up all these £20s and send them to the tax man, along with your employer's national insurance which might be say £5 a week.

The calculators in your starter pack will help you to work out the £20 and the £5 more accurately, and the calculation will also depend on what your employee's tax code is. The taxman will send you this at the start of the year, and every time it changes during the year.

At the end of the year

You've been paying your employee all year, taking tax and NI off of them, and paying this over to the tax office on a regular basis, but how do you know you've got it right? Don't worry as it all gets sorted out at the end of the tax year, and you will be sent a form to help you work out whether you have overpaid or underpaid.

Maternity pay, sick pay etc

You may think that as a small business you should not be burdened with having to calculate and pay such things. We agree, but unfortunately the taxman does not, and still wants you to do his work for him. As a small employer you will get most or all of this back, so you won't be out of pocket for long, but the onus is on you to make the payments to your employee first. What's more you even have to work out what to pay and how much to reclaim, and to keep records of this for the end of year form - What a cheek!

Sounds like too much paperwork?

Or too much of a minefield?

And we haven't even mentioned employment law, liability insurance or health and safety yet!

But don't panic, because we are here to assist, and to be fair the taxman does do a reasonable job of making all the information available to you.

Our concern is that many small businesses are put off by all of this additional responsibility and paperwork, so choose not to take on that extra pair of hands they so desperately need, or worse, pay cash in hand without keeping proper records.

Our payroll service offers complete support. We will...

  • Advise you on the tax and financial aspects of employing.
  • Set up a PAYE scheme, and arrange for all the paperwork to come to us.
  • Provide weekly or monthly payslips.
  • Let you have net pay amounts, often instantly, if ever you alter the wages.
  • Calculate your monthly or quarterly payments to the taxman.
  • Deal with non-routine issues such as sick pay, maternity pay and pensions.
  • Complete your end of year returns.
  • Address any queries or concerns that arise during the year.

If you are looking to take on an employee, or as an existing employer you are concerned that your payroll is in a mess or simply too time consuming, then please give us a call. We can give you all the advice and support you need to get you started, or we can do the lot, its up to you.

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