Skip to content
If you are a new limited company owner, you’ll need to think about how to pay yourself a salary (and your employees, if you’ve got them). Although you are on the receiving end of your business earnings, unfortunately, it’s not as easy as helping yourself to your wage, and every month needs to be reported to HMRC or accounted for. Here is our digestible guide on how to do small business payroll – we hope you find it useful.
Small business payroll to-do list
- Open a business bank account. We always recommend business owners open a separate bank account for their earnings – it’s much easier to track your incomings and outgoings and amounts not applicable to your business will stay private.
- Understand your tax thresholds. Your accountant (or accountant’s payroll department) will give you a maximum salary figure that you can take before exceeding your tax thresholds. For example, they may suggest a salary of £736.66 because this is within the National Insurance tax allowance. It doesn’t mean you can only take £736.66 each month – it just means any extra amounts used will need to be tracked as `dividends` (sums of profits paid to shareholders. Most directors are also shareholders).
- Entrust an accountant to submit your payroll figures. HMRC like year-end figures to be submitted correctly the first time, and they can issue fines if you make a mistake. By having your accountant or payroll team submit figures on your behalf, you can rest easy knowing they’ve done it hundreds of times – day in, day out. Most accountants offer a payroll subscription service that you can select as a bolt-on to the rest of your limited company taxes package.
- Utilise cloud-based software. Cloud-based accounting software is quick and convenient for you and your accountant to access – 24/7, regardless of where you are in the world. You can automate tasks, watch every figure on your dashboard, and so much more. Take a look at our A-Z of QuickBooks guide to learn about our partner cloud-based software, QuickBooks.
