Getting started with Payroll
Paying an employee’s wages for the first time can be a daunting task if you’re a new Employer. Having the best Payroll Software takes the fear out of it. Ireland operates a Cumulatave Tax System. This Means that when paying someone, their tax from Jan 1st to date is subtracted from their earnings from Jan 1st to date in any given pay period. Bullet Payroll automates most of the process for you, but it’s handy to know a few things before getting started.
Here’s some basic information you need to get you going:
1) Have you registered yourself/Company as an Employer yet?
If not, here’s the forms to get it done:
Once you’ve done this, it’s also worth registering for the Revenue Online Service here. It lets you do everything online, and gives you more time to do it.
2) Payroll Employee does not have a PPS number:
They need to visit their Local Social Welfare Office in person to apply for one. They will need to have photo ID and proof of address with them. Here’s a link to help you find your nearest office: http://www.welfare.ie/en/Pages/Intreo-Centres-and-Local-and-Branch-Offices.aspx
3) They do have a PPSn but this is their first time in employment:
They need to complete form 12A (here), and return it to the tax office: The Revenue will issue them, and you with a Certificate of Tax Credits and Standard Rate Cut Off Points, with all the Payroll details you need to set them up on your Bullet Payroll Software.
4) My employee is changing jobs and has provided Part 2 and 3 of a P45 from their last employer:
Great! Use the details on Part 2 to set them up on your Payroll System. Provided they were not on Emergency Tax in their last job, stick them on the Temporary Basis for calculating their tax for now. The Temporary Basis is described further on. Complete part 3 of the form and send it off to Revenue. (you can do this online if you’re registered on www.ros.ie). Revenue will send you back a Tax Credit Certificate confirming the employee’s tax credit entitlements ans Standard Rate Cutoff Point for the year.
5) My Employee is changing Jobs but doesn’t have a P45
Put them on the Emergency Basis for Payroll purposes (described further on) and complete form P46 here. Revenue will send you a Tax Credit Certificate confirming the employee’s Income to date and their tax credit entitlements etc for the year. Alternatively you can ask them to get a Statement of Income and Tax Paid to date from their previous employer, and you can use this to set them up on your Payroll on the Temporary Basis.
- The Temporary Basis: You’ve got Part 2 and 3 of a P45. The pay for each income tax week or month is dealt with separately and not on the Cumulative Basis. This is until the Tax Office notify you otherwise. The tax credits for week 1 (or month 1) are applied to pay for each week (or each month) and tax is deducted accordingly .Use the weekly/monthly Standard Rate Cutoff Point and Tax Credits from part 2 of the form to calculate net pay.
- The Emergency Basis: Use this Basis if you need to pay someone prior to receiving their PPS number, or if they give you a P45 directing you to use the Emergency Basis. The rates of Tax on the Emergency Basis are higher than usual which encourages people to sort out their tax affairs quickly.
What about PRSI/Universal Social Charge?