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If you employ people to work for your business and they receive at least £112/week (Lower Earnings Limit for National Insurance), or your company uses subcontractors for construction work, you are legally required to register as an employer. Furthermore, you must also register if you wish to pay yourself a director’s salary because, technically, you are employing yourself and will be required to pay tax and National Insurance on your salary income.
You are legally required to register your limited company as an employer if one or more of the following points applies:
If you are in any doubt, you can use this helpful tool on HMRC’s website to determine your company’s employer status.
You must register your company before the first payday, but not more than 2 months before you start paying your employees or yourself. The registration process can take up to two weeks, so don’t leave it until the last minute!
It’s relatively straightforward to register a company as an employer. The entire process is carried out online through HMRC. You will most likely require operating Pay As You Earn (PAYE) as part of your payroll - this is the system HMRC uses to collect Income Tax and National Insurance deductions from employees’ wages and pensions.
HMRC will ask you to set up an Government Gateway account (unless you already have one) and provide the following information during the online employer registration process:
You must also tell HMRC if you are hiring subcontractors in the construction industry or operating an occupational pension scheme.
Within 5 working days, you should receive PAYE and Accounts Office references from HMRC. Within a further 5 working days, you should receive an activation code for PAYE Online. You will be asked to provide these details when you send payroll information to HMRC, so be sure to keep them safe.
As an employer, you will have a number of legal obligations and requirements to fulfil, including:
For official information and further guidance on employing staff for the first time, please click here to visit HMRC’s website.
Rachel Craig is the Head of Content for Quality Formations Limited, the leading company registration agents in the UK. She provides small business advice and technical guidance on UK company registration, corporate compliance and taxation.
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