When running your own business, you’re likely to be responsible for paying your employees. While it can seem like an intimidating task at first, following these simple steps will ensure you’re doing everything correctly and avoid fines or penalties from the Irish Revenue.
Register for Irish taxes and employee contracts.
Before you start paying employees, it’s important to register with the Revenue Commissioners and Revenue Online.
Registration for tax purposes ensures that you are legally defined as an employer and will allow you to submit your employee payroll information on behalf of your business.
You can do this in person at your local tax office or electronically through Revenue Online by registering a PPS number (personal public service number) online via the Taxpayer section of their website. It’s also necessary for employers to register for employee contracts under Irish law if they want to hire employees in Ireland.
However, you don’t necessarily have to do any of this on your own. Firms such as SCK in Ireland and many others offer these types of services.
Determine your payroll cycle (weekly, monthly, etc.) and how often you’ll pay employees (once, twice, four times a month).
The first step to managing your payroll is determining what kind of payroll cycle you want and how often you’ll pay employees.
Payroll cycles are the interval between payments, so if you decide to pay employees weekly, then that means each week will be counted as one cycle. Payroll cycles usually fall into one of three categories: weekly, fortnightly and monthly.
The type of business you have will determine how often your employees are paid. For example, a retail boutique might choose to pay its staff every two weeks while larger companies might opt for quarterly payments or even annual ones.
Choose how you’ll pay employees (payroll cards, BACs transfer, or cash).
When it comes to paying your employees, there are a few different options. You can pay them in cash, have the money transferred directly into their bank accounts or generate an electronic payroll card (which is a smartcard with a specific amount of funds that’s preloaded onto it).
Here’s how each one works:
- Payroll cards. This is the most convenient way for employers to pay their staff. The employee receives the card by post and loads it with money from an ATM or via direct debit from their own account. They then use this card during every transaction they make at participating retailers.
- BACs transfer. This involves transferring funds directly into an employee’s bank account at end of each pay cycle instead of paying them in cash or generating a payroll card for them to use later on down the line – which means no waiting around at ATMs or dealing with queues!
- Cash payments require less paperwork but do leave room for error (and potential loss) due to lost cheques/cash not being reported as soon as possible after its been received from clients/customers etcetera – especially since there aren’t necessarily any rules regarding how long employers must wait before cashing cheques issued by customers!
Set up a system to record and organise employee hours.
To keep track of hours worked, you’ll need a system that records the time employees spend at work. This can be done manually or through an online system.
If you use a manual system, make sure that all employees record their hours and those times are recorded consistently across the board so there is no confusion when it comes to calculating pay.
Issue payslips to employees summarising how their wages have been calculated.
A payslip is a document that summarises how an employee’s wages have been calculated. If you don’t issue payslips, employees won’t know what they are entitled to receive in their pay packets each month, so it is important to issue them and make sure you keep track of all your records in your payroll system.
To issue payslips, you will need to:
- set up a template for the information that should go on the payslip in your payroll system (e.g., name, address and tax number)
- enter the details from each employee’s time sheet into their personal record in the system (e.g., hours worked)
- print out all of these records as one large document or several documents depending on how many people work for you
Paying your employees can be complex in Ireland but it doesn’t have to be difficult if you know what you need to do
Payroll is a complex topic. There are many rules and regulations to be aware of, and there are several different payroll methods available. However, if you’re well-informed about the process, it doesn’t have to be difficult.
You need to understand that your employees’ tax and PRSI contributions depend on how much they earn each week or month. If your employees work overtime or shift work, their tax rate will increase accordingly (though they’ll also receive an additional payment).
So there you have it. The big picture of payroll for small businesses in Ireland is a bit complicated, but the process itself can be easy with the right tools and knowledge.
Remember that you are not alone in this process; there are lots of resources out there to help you find clarity on how to do what’s best for your business.