I have only been bookkeeping on my own for just over a year and now. Today one of my clients has contacted me to ask whether I can put his son on the books as his only employee, is this something that I can do? I am qualified through the AAT and covered payroll in my studies. I would like to do a payroll course but at the moment I have two small children so time to do anything other than work is scarce so it's not an option at the moment.
As it's just one employee getting paid the same set amount every week, would this be out of my depth and do I need to be covered by any insurance?
First of all I would contact the AAT (I assume you are a Member in Practice?) and check whether you are allowed to offer payroll? I don't know a lot about the AAT, but as an ICB member I would not be able to offer payroll without the payroll qualification. With regard to insurance, are you not covered by any at the moment?
Hi Pauline,
No I'm not a MIP but I am a full member of the AAT. I am covered by professional indemnity insurance. I know that the AAT offer payroll courses so maybe they work the same way as the ICB.
Regards
Vicki
I would give them a call then and find out if you are allowed to offer payroll. One employee earning the same amount each week/month shouldn't be a difficult task. If the employee will be earning less than the NI threshold you will not have to submit any paperwork to HMRC, but I think your client will still have to register as an employer, but best to check this with them. (If you can get through!)
Hopefully you were thinking of downloading a suitable payroll software. I am thinking ahead for the new RTI coming in place when a payslip will be required and need declaring prior to making payments. A lot of companies making manual calculations will come into problems here.
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Donna Curling - Complete Book-Keeping Ltd (CBKLtd) - 07939 101900
I think that RTI will cause a lot of problems full stop.
Won't the declaration be done on line though so peoples existing payroll processing should not change too much. Only their reporting requirements which really do not take into account the annualised nature of directors salary calculations.
I need to find out if there is a quarterly salary option within RTI or whether the assumption is simply monthly reporting in which case I'm seeing directors having eight returns of somewhere between 1p to £600 and four real one's... Or even eleven and one!
Well, here's hoping that the HMRC website can handle the increased reporting requirements that RTI demands and that the tax credits system does not go into meltdown with month on month huge variances in directors salary.
To my mind a poorly thought out disproportionate sollution to a problem that is likely to see a few ministers heads on pikes.
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Employers sometimes continue to pay the same net amount even when there is a change in Tax Code Number. Agreements are naturally made for the 'in-hand' amount rather than a changeable Gross and stays the same amount until renegotiated. If a code number is lowered, the employer increases the gross, so the employee's finances and the agreement are not upset. This scenario results in greater PAYE due but might be offset by a second employee who has received a raised Code Number. One result of this is that payslips can be prepared far in advance or well behind the pay date. Not that they always are - just that it has no consequence. Another result is that PAYE has been very easy to comply with.
Many agents will provide payslips electronically and half of them never see a printer. If they're lucky, the employee may get the .pdf forwarded by email. I've seen piles of unopened envelopes, sent on the dot but only ever opened if an employee has a benefit application. Therefore, in the real world, it doesn't matter when they are prepared: monthly, quarterly, upon request or whenever the agent verifies what was actually paid.
For changes, employee tax deductions can be altered when the books are seen each quarter or annually at a push. The last thing micro business needs is weekly communications with an agent confirming unchanging net wages when the agent will find this out in 3 months anyway. More needless accountancy fees in a recession - great idea, Minister.
This is the elephant in the room with RTI. As of now, I am only obliged make a submission at 1 or 2 points in the tax year EG. any time during 6 weeks after 6th April. Soon 52 submissions will need to be made within what ? 24 hours - a week - a month of the pay day? I suggest this is a radical change to millions of common-place transactions (wages) and that there be unusually large margins of error and late filing chances before so much as a warning is sent out by HMRC. No other commercial transactions are monitored in this way and the eventual penalty system will define what actually constitutes 'Real Time Information'. See consultation : -
To report these in 'real time' requires additional confirmation/intervention, for no other accounting purpose but to support Universal Credit calculations. RTI need not carry penalties where there is no benefit claimant.
Even before we think of tax implications, this is a massive imposition of mechanical bureaucracy, and may be totally unforgiving to mistakes and be far more onerous than what happens now, in practice.
