Payroll Basics for Small Businesses: A Simple Guide

If you’re hiring your first employee, payroll can feel overwhelming. It’s more than just paying wages – there are legal responsibilities you need to meet. Here’s a clear, jargon-free guide to help you get started.

Do You Need to Register as an Employer?

If you pay anyone above £96 a week or provide benefits, you must register with HMRC as an employer. Even directors of limited companies often need payroll for their own salary.

What Does Payroll Involve?

Running payroll means:

Calculating wages and deductions (tax and National Insurance).
Submitting Real Time Information (RTI) reports to HMRC every payday.
Providing payslips to employees.
Paying HMRC on time.

Workplace Pensions: Don’t Miss This Step

Auto-enrolment is a legal requirement for eligible employees. Missing pension duties can lead to fines, so make sure you understand your obligations.

Common Payroll Mistakes

Missing RTI submissions.
Forgetting student loan deductions.
Not keeping payroll records (HMRC can ask for these).

How to Make Payroll Easier

Not all accounting software offers strong payroll features. Some popular platforms, like QuickBooks and Xero, have payroll add-ons, but they’re often limited and can be costly for small businesses.

Instead, consider dedicated payroll solutions such as BrightPay, Moneysoft, or Sage Payroll, which are designed specifically for UK compliance and offer better flexibility.

If you’d rather not deal with the admin, outsourcing payroll is a stress-free option – and I can handle everything for you.

Payroll FAQs

1. Do I need payroll for one employee?
Yes. If you pay above £96 a week or provide benefits, you must register as an employer and run payroll.

2. Can I run payroll myself?
Yes, but you’ll need payroll software and an understanding of HMRC rules. Many small businesses outsource payroll to save time and avoid mistakes.

3. How often do I report to HMRC?
Every time you pay employees, you must submit an RTI report on or before payday.

4. What happens if I miss a payroll deadline?
HMRC can issue penalties for late submissions or payments, so it’s important to stay on top of deadlines.

Need help with payroll?
I offer payroll services for small businesses across Cornwall and beyond. I’ll make sure everything is accurate and on time, so you can focus on running your business. I can even process the payments to your employees so one more thing to tick off your list.
Contact me today to find out more.

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