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Limited company payroll questions

How to handle payroll for a single director when registering as employer part way through year

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I registered a limited company in March and it made its first money 15th March. I'm the director and the only person involved in the company. I finished a permant role late March and the new company is going to be my only source of income this financial year.

I've only just registered for as an employer, set up payroll in my accounting system (FreeAgent) and set myself as an employee from 6th April 2022. I have a few questions:

1. Setting up payroll today (7th May), FreeAgent showed that month 1 of payroll would be 2 days overdue. I've therefore cancelled that month as I don't want to face any penalty. Do I need to make any sort of RTI submmission for that first month, given that I've not paid any salary? Would it help at all if I mark myself as an employee from 6th May instead?

2. I was planning to pay myself £758.33 per month for 12 months (£9100), to simplify income tax and employer/employee NI. Can I simply recalculate this over 11 months - i.e. pay myself £827.27 (£9100/11) per month for the rest of the year?

Sorry, probably daft questions but this is pretty new to me...

Thank you.

Replies (16)

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By Matrix
07th May 2022 17:18

You say you registered as an employer part way through the year but didn’t say when you registered which is pretty key. I would read the letter you received regarding your duties.

Maybe the lovely people at FreeAgent can help you, given you have chosen to do this yourself. Or search their directory for an accountant as you will no doubt need one at some point.

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Replying to Matrix:
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By ae_ny
07th May 2022 18:01

Appreciate the reply, thanks. I've just had confirmation through from HMRC, so about a month into the year. I will indeed get an accountant, was just hoping to get stable financially first.

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Replying to ae_ny:
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By DKB-Sheffield
07th May 2022 18:26

FWIW, there is a big difference between 'about a month' and 'just hsd confirmation through'.

Neither is a DATE and, that date is all important in knowing when your duties start AND what you have to file and when!

You can't however 'cancel a month' on FreeAgent to avoid a penalty! You report to HMRC through FreeAgent. FreeAgent don't make the rules.

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Replying to ae_ny:
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By Truthsayer
08th May 2022 12:27

'I will indeed get an accountant, was just hoping to get stable financially first.' That's an example of getting the cart before the horse.

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By David Ex
07th May 2022 17:53

ae_ny wrote:

Sorry, probably daft questions but this is pretty new to me...

No need to apologise. It'll all be very routine for the accountant you have engaged to make sure you do everything correctly and to your best advantage.

You could use the same accountant who advised you that it was a good idea to operate via a company.

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Replying to David Ex:
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By ae_ny
07th May 2022 18:06

Thanks for the reply. I haven't engaged with an accountant yet, although I am making enquiries. I was hoping to just get a little bit of advice in the meantime (i.e. not instead of paying someone for their expertise longer term).

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Replying to ae_ny:
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By Wanderer
07th May 2022 18:16

ae_ny wrote:

I was hoping to just get a little bit of advice in the meantime ....

A little bit of advice I'd give is to just stop right now, stop registering companies, stop putting earnings through them, stop registering as an employer, stop running a payroll, stop setting up FreeAgent, stop planning what you are going to pay ................. and engage that accountant immediately.
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Replying to ae_ny:
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By DKB-Sheffield
07th May 2022 18:22

I think David's given you some excellent advice right there!

If you postpone getting specific advice (relying in forums instead), your accountancy bill is likely to be higher (not to mention HMRC/Co House penalties).

If a client comes to me 12 months after starting business, I can categorically state that their first year fees are double that of the ones who come to me before day one! Not to mention they've usually incurred penalties and are 6 months late registering for VAT!

That said... tomorrow, I plan on changing my boiler. I'll see if I come unstuck before bothering a gas fitter. I may be lucky and I may just get away with it. If not.......?!

EDIT: Wanderer has also given great advice but has quicker typing skills than me!

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Replying to ae_ny:
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By David Ex
07th May 2022 19:57

ae_ny wrote:

Thanks for the reply. I haven't engaged with an accountant yet, although I am making enquiries. I was hoping to just get a little bit of advice in the meantime (i.e. not instead of paying someone for their expertise longer term).

I’m building my own house and going to get a building inspector in when the roof’s on. Think of it that way.

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Replying to ae_ny:
the sea otter
By memyself-eye
07th May 2022 21:05

haven't engaged an accountant
says it all...
I just bought a Cessna, I took off ok, but I haven't hired a pilot - how do I now land it?.......
Boom!

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Replying to ae_ny:
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By Leywood
08th May 2022 07:06

Just instead of paying for their advice in the short term then.

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By Catherine Newman
07th May 2022 20:11

Have messaged the OP tonight offering to sort them out.

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Replying to Catherine Newman:
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By spilly
08th May 2022 09:56

That sounds vaguely worrying. As in the type of ‘sorting out’ when you send the heavies in!

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RLI
By lionofludesch
08th May 2022 10:36

Might be an idea to go back to your former employer and ask for your job back.

If you can't afford an accountant, you can't afford a business.

No doubt many of us on here have spent countless hours firefighting for people whose businesses used to be too small to be bothering accountants.

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By MCV71
08th May 2022 11:20

The cloud software companies have a LOT to answer for. They've encouraged people that operating a business and the related accounts is a piece of p*** and anyone can do it without advice.

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By BeataKl
08th May 2022 12:40

You have to start submitting from the date the PAYE scheme was registered with HMRC because this is when they expect you to start filing.
If your scheme was registered in month 1, either
- submit an FPS for month 1 (apply a late submission reason if relevant, but it is unlikely you will get a penalty) or
- submit a nil EPS for month 1 (no payment to employees) and start submitting FPS from month 2.
Regarding your start date on the payroll for the director's NI purposes, this is the date you were appointed as the director. You would only use the 6th of April if your software did not allow a previous tax year start date.

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