Taking on your first employee

Taking on your first employee is both exciting and daunting!  You are excited because your business has grown enough for you to employ someone else, this means you are doing well!  But it is also daunting, the extra admin and making sure you are doing things correctly can be stressful.  But don’t panic, we are here to help!


Registering with HMRC as an employer

The first step you will need to take once you have recruited your employee is to register with HMRC as an employer.  You need to register at least one week before the first payday.  It usually takes up to 5 working days for your employers PAYE reference number to arrive and it makes it easier to run your first payroll if you have this number first.

You can register here: https://www.gov.uk/register-employer


Choosing a payroll software

There are a variety of software providers available for payroll with a variety of different prices!  You will need to work out which one works best for your business.

My personal favourite is Sage, it has some brilliant functionalities.  However some smaller businesses may find this a costly option and wont receive the full benefit of the functionalities until they are employing a larger amount of people.

HMRC offer a basic payroll software for free if you have fewer than 10 employees.  This is great for starting out, but it is what is says on the tin – basic.    There are a few other free payroll software providers, you can see a list here.

Other paid for providers worth mentioning are Quickbooks, Xero & Clear Books.  These are all great payroll providers with various functionalities to suit multiple businesses.  There is a full list of payroll providers on HMRC’s website, you can access this here.

It is important to find one that works for you and that you are comfortable with.


Collecting and Keeping Records

You need to keep records of:

  • Employee details, such as Name, address, NI no, DOB, right to work in the UK
  • What employees are paid and any deductions made within each pay period
  • Reports you send to HMRC and any payments you make to them
  • Employee leave and sickness
  • Tax code notices
  • Taxable expenses or benefits


Registering Employees

Employees are registered using FPS (full payment submission) that is sent to HMRC each pay period.  You will need to collect information from your employee to set them up correctly.  You need the information mentioned above, along with either the employees P45 from their previous role or you will need to ask the employee to complete HMRC’s starter checklist.  You can find this here.

Input the information you have collected into your payroll software and once you have processed the payment you can send the FPS to HMRC, this is how employees are registered.


Recording Pay

Your payroll software will record pay made to your employees.  You will need to keep copies of reports from each pay period.  You need to send the FPS to HMRC on or before each payday.  Keep records of your FPS submissions.  If you need to claim back any statutory payments or claim and small business relief you will need to send an EPS to HMRC before the 19th of each month.


Paying HMRC

You will have to pay tax and national insurance to HMRC.

You can log into your employers account on the 6th of each month and view the tax and NI due.  This must be paid by the 22nd of each month.

Your payroll software may have a report you can run to check the amount HMRC have requested against the figures within your payroll software.


Other Things to Consider

You will also need to consider your business insurance, you will need employers liability insurance.  You will also need an employee contract, it will be worth your while contacting a HR support company and having one created for you, professionals really are worth their weight in gold!


How We Can Help

Bright bookkeeping services offer a comprehensive payroll support package from just £25.00 per process date for the first 3 employees and then an additional £5 per process date for any additional employees.

Have a look at the payroll section on our website here: https://www.brightbookkeepingservices.com/services/payroll/  Or send an email to contact@brightbookkeepingservices.com


Workplace Pension Re-enrolment

Most businesses will be entering their first re-enrolment window soon, if not already. So what is workplace pension re-enrolment?


Workplace pensions are mandatory for all businesses with eligible employees.  Employees can decide to opt out of making pension contributions, if they do you don’t make contributions on their behalf either.  Every three years you are required to re-enrol any eligible employees who have opted out or ceased making contributions.


Below are the steps you need to follow when re-enrolling your employees.


Step 1 – Choosing your re-enrolment date

You should receive a letter from The Pensions Regulator explaining when your re-enrolment window opens. Your re-enrolment window is a 6-month period.  This period will cover 3 months before the third anniversary of your staging date, and three months after.


You can choose any date within your re-enrolment window as your re-enrolment date.


Your re-enrolment is specific to your pension staging date, and not specific to when each employee opted out.


Step 2 – Ascertain which employees need to be re-enrolled

You need to assess each employee that has opted out or ceased making contributions to their workplace pension to see if they are still classed as an ‘eligible job holder’. This means they are over 22 and below state pension age, and meet the earning requirements of the workplace pension.


You do not need to re-enrol anyone who has not yet been enrolled into your pension scheme. For example if you have a new employee and have postponed their contributions so they will not have joined the scheme before your re-enrolment date they do not need to be assessed.


You may not have any employees that need to be enrolled, this is fine you can proceed to the final step!


Step 3 – Re-enrol your employees

After finding out who you need to re-enrol, the next step is to get your employees re-enrolled into your pension scheme. This will vary depending on how you process your pensions.


If you submit your pensions manually to your pension provider then on your re-enrolment date you will need to make a submission to them containing the details on the employees you need to re-enrol.


If you use payroll software to submit your pension data then you will probably use the same method to submit your re-enrolments. Please speak to your payroll software provider.


If you use a payroll company to process your pensions then they should have all the information they need, get in touch with them to make sure they have it in hand. It is your responsibility as the employer to ensure re-enrolment requirements are met.


Step 4 – Inform your employees they have been re-enrolled

Send your employees that have been re-enrolled a letter explaining that they have been put back into the workplace pension, and if they wish to opt out again they can. You should explain how they could opt out, and also the benefits a workplace pension offers. Your pension provider may have template letters on their website that you can use.


Step 5 – Make a declaration to the pension regulator

Once you have fulfilled all of your obligations as an employer you need to log into your account with the pensions regulator and make a declaration to inform them all eligible employees have been re-enrolled.


Then you are finished! If you have any questions or feel unsure then get in touch and we will see if we can help you.