How To Pay Your First Employee

Taking on your first employee and how to pay your first employee is often a big and challenging step for any business. In this blog we will outline some of the payroll basics to which you will need to pay attention.    The PAYE (Pay As You Earn) process can be daunting and can take you away from your core operations but it is a legal requirement when employing someone. A payroll agency is a good way to avoid the complexities of payroll.

PAYE

PAYE is the system that HMRC uses to calculate National Insurance Contributions & Income Tax from an employee’s pay as they earn it.

How is it relevant to me as an employer?

It is your legal responsibility to deduct NIC’s & Income tax from your employees’ pay cheque for each pay period and to send this money to HMRC. You are also obliged to provide each employee with a payslip which outlines all of the deductions.

You will also need to ensure that you pay the employee correctly on a monthly basis.

How much tax & NIC’s should I deduct?

When your new employee starts work you should request a copy of their tax code and their National Insurance number. Using this information and their earnings so far this tax year you or your payroll agency can calculate their tax and NI obligations.   You can calculate this manually or you can use payroll software (which is recombined by HMRC as it is more efficient and reduces errors). For more information read this page on the HMRC website.

How often should I pay HMRC

You should pay HMRC;

  • By post on the 19th of each month
  • By electronic payment on the 22nd of each month

In some instances you can pay annually or quarterly but this is down to specific circumstances take at the HMRC website for more information.

How can Paybureau help?

We offer an end to end payroll solution for small and medium sized businesses. If you need help with your payroll get in touch with us today using our contact page  or call us on 01242 573 321.