Thursday, November 21, 2013

Sole trader payroll solutions

Payroll status
If you are self-employed, running a business on your own, taking all of the business decisions and enjoying sole ownership and the profits, then you are a ‘sole trader’. All you have to do to become a sole trader is to set up a business, let HMRC know as the relevant tax authority and complete a fairly basic form (a 41G) that the tax office will send to you. Being a sole trader doesn’t mean you must work exclusively by yourself, you can employ people to assist you as your employees, but the ownership of the business is yours alone.

There are lots of advantages to being a sole trader – there’s that important engagement with your customers - your time is your own, there’s less red tape and of course the profits you make are yours to enjoy so you can see clearly where you stand financially. Many individuals that are now high earners took their first steps on the business ladder as sole traders running small businesses.

There are also pressures too – and one of the main ones, especially as your business grows, can be doing the paperwork involved in your employees’ pay – working out their tax and NIC and making sure they actually get paid on time and that the correct deductions are paid over to HMRC.  If you want to operate a smooth-running and efficient business the last thing that you want is an employee who is very unhappy because he or she has not received the correct pay because you didn’t understand, or didn’t sort out their tax code correctly. An employee who is paid late or paid incorrectly more than once is not only going to be unhappy but might start looking for another job, giving you problems in managing how you run your business at a practical level until you find a replacement.

If you want to run a successful business but don’t have the time or the experience/desire to deal with the stresses of the payroll there are many companies who can do this work for you. They can provide a payroll package, from the initial start-up of your first employee through to running complex business affairs employing successful high earners. Such a company can supply everything you need to run your business finance efficiently, ensuring that you pay only what you need to. This can take some of the strain off you. Other responsibilities you maybe hadn’t even thought of yet can also be outsourced.

Data protection; setting up BACS payments with your bank to make sure the money is in place, dealing with quarterly returns and producing payslips for your employees, and using custom-built IT systems that keep your records safe and ready to run as soon as your need them, can all be supplied by a specialist company. This keeps the burden of administration down and makes sure that your returns (to HMRC) are correct and submitted on time.

Finding the right payroll provider is as important as using the best payroll system – it’s easy to be seduced by introductory offers or glitzy IT systems, and to pay more than you need for stuff you simply won’t use, so your first job is to find a company that will ensure you get a payroll-system that is tailor-made for you.

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