Can I do my own payroll for my small business? Yes, if you respect the calendar

How to do payroll yourself, in order

1. Register before anybody is paid. Employer registration and the reference numbers it produces have to exist before a first payment, and obtaining them takes days rather than minutes. Starting this late is the commonest first mistake.
2. Settle status before the first payment. Employee or contractor is a legal question with consequences far larger than any payroll decision. Get it right at the outset rather than reclassifying later.
3. Put every deadline in a calendar with a reminder. Deposits, returns, year end. Not a list on a wall, a calendar that alerts somebody. Almost every penalty a small employer pays comes from a date rather than from a calculation.
4. Decide your stopping point in advance. A second jurisdiction, the first employee with a court ordered deduction, or ten people. Naming the trigger now stops the decision being made in a bad week.

How to do my own payroll: what it actually involves

Registering as an employer, collecting the right details from each new starter, running the calculation each period, paying people, making the deposits or payments to the authorities on time, filing the periodic returns, and completing a year end. Software does the calculation and some of the filing; the rest is yours.

The recurring cost is attention rather than hours. A monthly payroll for four people takes very little time and requires you to be reliably available on particular days, which is a different thing from being busy.

Where people get caught

Deadlines during holidays, a starter who joins mid period, somebody who leaves owing holiday, and the first time a statutory payment applies. Each is ordinary and each is the point at which an owner realises they are guessing.

The other trap is guessing at status. Paying somebody as a contractor when they are an employee is the error with the largest consequences, and it is decided by how the work is actually done rather than by what the agreement says.

When to stop managing payroll yourself

When you cross a border, when headcount reaches the point that queries interrupt you weekly, or the first time you miss a deadline. Any of those is a signal that the arrangement has outgrown itself, and the third is the clearest.

Moving is easiest at a quarter or year boundary and hardest mid quarter, because year to date figures have to carry across. Deciding while you still have a choice of date is worth more than a few months of saved fees.

Common questions

Is doing your own payroll risky?

The arithmetic is not, because software does it. The risk is the calendar and the treatment of unusual cases, and both are manageable if you take them seriously.

How long does a small payroll take each month?

For a handful of people on fixed salaries, well under an hour once established. Setting it up and the year end are where the real time sits.

Can I pay myself through my own payroll?

It depends on your business structure and how you are engaged by it, and the answer changes what is owed. It is the one question worth asking an accountant even if you do everything else yourself.

What happens if I miss a filing deadline?

Penalties usually accrue from the date, and they compound. Filing late is generally better than not filing, and telling the authority before they tell you is generally better than waiting.

Coverage by country

• Employer of record vendors covering Singapore
• Employer of record vendors covering Mexico
• Employer of record vendors covering Spain
• Employer of record vendors covering Colombia
• Employer of record vendors covering United Kingdom
• Employer of record vendors covering France
• Employer of record vendors covering Hungary
• Employer of record vendors covering New Zealand