A question I often get asked by newly self employed people is whether they need to operate a payroll scheme and the national minimum wage.
The second one first - minimum wage does not apply to sole traders. Simple!
The first one - if it is just you in the business and you have no employees then a payroll scheme is not needed as you will pay the appropriate tax and NI when you file your tax return. Sole traders do not draw a salary, they pax tax on their profits. You do not need to register as an employer.
If you are a sole trader but you actually have employees - then yes you need to set up a payroll scheme and register as an employer with HMRC. Those employees would then be entitled to the national minimum wage, but you wouldn’t be. You also need to put a pension scheme in place - even if the employees decide to opt out of it.
If you are a sole trader with no employees but you use sub contractors registered under the CIS scheme (construction) then you need to register.
For those people operating through a Ltd Company then the advice is slightly different.
Processing payroll can be relatively simple - HMRC even give you free software to help you do it (only works if you have fewer than 10 employees mind you!)
Who said HMRC are tight?
We hold a Practicising Certificate issued by the Chartered Institute of Management Accountants and are regulated by them.
We are regulated under both the Anti Money Laundering Regulations and the Data Protection Act.
Any advice given on this website is of a general nature. Specific client advice will only be given once you have formally engaged our services.
© Copyright 2016 - 2023 Scribble Business Services Ltd | Web design by MPS Creative