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Is your payroll ready for RTI?
October 12, 2012
Over the next few months, three little letters, RTI, are going to be big news for any companies that pay employees through PAYE. Significant changes are being made to the PAYE system - perhaps the biggest since it was introduced in 1944.
RTI stands for Real Time Information, and it signals a change in the way your business reports payroll data to HMRC.
Instead of filing payroll returns once a year, from April 2013 most companies will be required to submit payroll data to HMRC every time they run payroll. No matter whether you pay your employees weekly, fortnightly, monthly or once in a blue moon, RTI means that when you run payroll you'll be expected to send the details electronically to HMRC.
Why RTI payroll?
PAYE hasn't kept up with recent changes in working patterns. These days, many people people switch jobs more frequently or do more than one job at once. When payroll data is only reported to HMRC once a year, it's not uncommon for people to end up paying the wrong amount of tax.
Under RTI, HMRC will have access to much more recent information. This should drastically reduce problems, making things easier for everyone involved.
Getting ready for RTI
RTI payroll software includes: |
It's not up to you whether you decide to adopt RTI payroll. Legislation says all businesses with fewer than 5,000 employees must start using it in April 2013. With a few months still to go, now is a really good time to think about how you'll implement it.
You will probably need to make some changes to how you run payroll in order to accommodate RTI. Because RTI data must be submitted electronically, you need to use a payroll service or payroll software that can do this.
It's also very important your employee data is accurate. Before you start using RTI, HMRC will match your employee list with its own records, to ensure payroll information is recorded correctly. Any initial problems are likely to be related to mismatched names, dates of birth or National Insurance numbers.
RTI ready packages
Payroll packages like IRIS, Payroo (both free, at least for basic functions), QuickBooks and Sage will all be able to send data to HMRC under RTI before April next year. If you rely on an accountant or outsourcing service instead of doing payroll in-house, make sure they're up to speed with the changes and will be ready to go next April.
If it all works out, submitting RTI data should be as simple as clicking a button during your payroll process. In fact, because RTI means no more year-end returns, and no need to tell HRMC every time an employee starts or leaves (RTI sends all this information for you), it should actually save you time.
HMRC will let you know when you need to move to RTI. But it's going to happen to virtually every company in the next few months, so it'll pay to prepare now.
- Get ready for RTI
- One in three small firms unaware of payroll changes
- Will RTI benefit your business?
(Image: Flickr user dennis under Creative Commons.)
Five simple apps to help your business keep good financial records
July 24, 2012
How not to look after your receipts (Image: Flickr user Carly & Art under Creative Commons.)
Maintaining financial records can be tricky for the smallest businesses, like sole traders and companies below the VAT threshold. There's a temptation to simply bumble through and hope you don't miss anything.
The inevitable result is that your tax return is painful. You spend about three days hunting for paperwork that hasn't been eaten. Then you sheepishly give your accountant a shoebox full of crumpled, illegible receipts and politely ask them to sort it all out.
It costs you in time, in accounting fees and in expenses you failed to claim back because you've lost the receipts or forgotten about them.
Do little and often
Like most things, keeping up with your accounts is easiest if you do it little and often. Don't wait till the end of the month to record all your expenses - do them every week, or every day.
And that's why it's interesting that, buried away on the HMRC website in the 'support for software developers' section (yep, I bet you've checked that page recently), is a handy list of five mobile apps designed to help smaller businesses keep good records.
Using a mobile app makes sense. You'll always have your phone with you, so it's a good tool for noting down expenses, payments and so on. You can even photograph receipts with your phone's camera.
Here are the five apps listed on the HMRC website that could make your record keeping a little easier. Most are from established accounting software firms, so if you already use accounting software it's probably a good idea to try the matching app first.
For iPhone and iPad:
- Intuit MyBizTracker. This app from the makers of QuickBooks lets you record income and expenses so you can check your position at a glance. You can also snap a photo of receipts with your phone's camera, to save with the other details.
More about MyBizTracker >> - Sage Record Keeper. This app is from the makers of the comprehensive Sage accounting software. It offers similar functions to MyBizTracker, but can also handle CIS deductions (which only apply to businesses in the construction sector).
More about Record Keeper >> - Earnest. With similar photo functions to the other apps, the main difference with Earnest seems to be that it'll give you a rough idea of your tax liability at any moments. It's from the people who make FreeAgent accounting software.
More about Earnest >>
For Android devices:
- ZipZipBooks. Although it promises similar features to all the other apps listed here, ZipZipBooks is specifically designed for companies in the construction and property sectors. From the screenshots, it looks quite utilitarian.
More about ZipZipBooks >> - Forbes Record Keeper. Scant information is available from the 1999-style Forbes Computer Systems site. But this app is similar again, although its ability to send data to a Dropbox account might be useful if you use the online backup service.
As all these apps are free, the best way to figure out if they work for you is probably just to try them. Let us know how you get on! You can see the list on the HMRC website too.
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