Payroll matters

1. Registration as an employer - please telephone the Inland Revenue employers helpline on 0845 60 70 143 to register the company as an employer (Monday to Friday 8am to 8pm, Saturday and Sunday 8am to 5pm). They will/may request the following details:

(i) Company name, number and date of incorporation (this information is stored within your Ezacs Account - select "Company" from left hand menu);
(ii) Business address - your home address;
(iii) Registered office address, if different from business address (please state that the registered office address is the same as the business address if this is the case - see 3 above).
(iv) Directors name (i.e. you), address, NI No., Date of Birth;
(v) Nature of business e.g., IT consultancy; and
(vi) Expected first pay day - we recommend that you pay yourself a small salary of circa £5,000 annually in arrears. Therefore the first pay day should be quoted as next March following the date of registration.

2. Employee details - before you can calculate payroll you must create a the employee record here. If you are a director then please ensure that "Yes" is selected next to the Director field.

3. Payroll - is calculated on a monthly basis using your tax code from your P45 or P46; if you do not have a P45 or a P46 it is important that you complete a P46 form - please download a P46 here - and send it to the Inland Revenue.

If you complete a P46 and you tick statement B then the following will apply under coding information for the tax year 2004/05.

For "New employee who has signed statement" - enter "B" in box.
For "Code operated for this employee" - enter "503L" in box.
For "Enter X in box if code operated on week 1 month/1 basis" - enter "X" in box.

The other required items on the P46 should be self-explanatory.

You then need to create a new employee record; based on the above the tax code will be "503" and the suffix will be "L" and the week 1/month 1 "Yes" box needs to be ticked. Also, if the employee is also a director - the "Yes" box needs to be ticked as the NI rules differ for directors pay. You will then be able to calculate the monthly salary for the employee using the payroll calculator.

4. PAYE and NI returns - you will receive a yellow payslip booket from the Inland Revenue after you have registered as an employer. This is used to pay over any "pay as you earn" income tax and national insurance owed to the Inland Revenue. There is a "payslip" for each month and the boxes for "net income tax", "net national insurance" and the "amount due" must be completed and returned with a cheque for the total amount ("amount due") before the 19th of each month following the "payslip" month end.

If you are running payroll only once in March each year then you must still submit the yellow payslip each month but with an amount of £0 in each of the boxes referred to above ("a nil return").

Also if your payments of the amount due are less than £1,500 per month, you can choose to make quarterly payments, rather than monthly payments - you must contact your Inland Revenue accounts office to arrange this. If you use this basis you return the period ending 5th July, 5th October, 5th January and 5th April payslips with the "amount due" for each of the 3 months in each relevant quarter.

The "net income tax" figure for each month is the amount in the "Tax" column (NOT the "Tax (cum)" column) for the relevant month that you have calculated payroll. "Net national insurance" is the sum of the "Ee's NI" and "Er's NI" columns for the month.

On the first screen select the category Payroll - Salaries (or "Payroll - PAYE" if you are paying a cheque to the Inland Revenue), enter the employee name (or "Inland Revenue" if you are paying a cheque to the Inland Revenue) and hit the "continue" button".

On the second screen you should enter:

(a) payroll period (from/to) dates; and
(b) the amount from the "net pay" column in the payroll analysis (or "amount due" if you are paying a cheque to the Inland Revenue).

You can then "save" the transaction.

You should then make cheques payable to you (or the Inland Revenue). Do not forget to enter the paid details for the transaction.