Paycheck Plus - Making Payroll Easy

Whether you are a small company or a large organisation, payroll is a standard overhead cost. The question is, is it costing your more time and money that it should?  We are hearing more and more about companies out sourcing various tasks to companies such as IT, Cleaning & Security, Human Resources, and even some aspects of sales. Another trending service for companies seeking to save money and become more efficient is payroll.

Time spent on payroll – a cost or a benefit?

Although payroll is not a task that adds value to a business, it is one that has to be done. Because it’s a necessary task, the time it takes to manage it can often be underestimated. Aside from the hourly rate of the person processing, one should consider the additional less obvious costs such as Employers PRSI, holiday leave, sick leave, and other employment costs such as insurance, IT resources, Data protection, backup and storage.  Then there’s the costs of training a replacement or additional person to process or manage the payroll during any periods of leave, planned and unplanned.  The payroll software support, maintenance, IT resources and on-going updates and training further increase these costs.  Add in stationery and additional resources at year end and you will see that the costs of processing in-house are quite a bit more than originally expected.  And if that’s not enough, just consider what revenue generating activities could be accomplished during the time it takes to manage payroll.

Studies have found that almost every company can save by outsourcing their payroll requirements to a professional payroll outsource company.

Although you may have reliable payroll staff or have been managing payroll for years – tax laws and payroll regulations change frequently. It is a time consuming task to stay on top of changes on a regular basis. Late submissions and calculation errors can incur significant fees, interest and penalties.  For employers who have employees in Ireland or and the UK, it can be more difficult as tax laws vary from country to country.  Utilising a specialist company to process ensures your payroll will be processed correctly and on-time while regardless of the differences in legislation and calculation details.

Give yourself and your company peace of mind and consider outsourcing your payroll. Contact us today for a consultation to see how your organisation can benefit from outsourcing your payroll.

Outsourcing services remain a popular and cost saving alternative for many companies as businesses find themselves in recovery mode. Managing Director of information technology (IT) support service provider, Complete IT, Colin Blumenthal, stated in the Peterborough Evening Telegraph: “As organisations’ see the slow signs of recovery and growth, re-investment will be needed and this offers a perfect opportunity to re-evaluate whether the functions are best managed in-house or outsourced.”

According to recent reports, small and mid-sized businesses are in a better position to outsource areas of their business. It makes little commercial sense to hire staff internally to maintain jobs that can be done cheaper and faster by outsourced companies. By hiring companies that specialize in specific areas of business, owners are able to focus more on their core business. “It can be difficult to find qualified experts prepared to do part-time work, so outsourcing offers an ideal business model,” Mr Blumenthal commented.

At a very minimum, companies should do their homework and see what opportunities lie in moving internal time consuming tasks to outsourced companies. With payroll being among some of the most opportune tasks for outsourcing, why not request a free consultation from Paycheck Plus today by calling 1890 552 552 or e-mail areilly@paycheckplus.ie for further information without obligation.

Summer holidays are just around the corner and many employers are considering hiring students during this time. Although it’s nice to see employers affording the opportunity to the future leaders of this country there are also many rules and regulations employers need to be aware of if they are considering hiring students.

The Protection of Young Persons (Employment) Act is designed to protect young workers under the age of 18.  Below are several areas employers need to be aware of.  However for full details and legalities, please contact the Employment Right Information Unit, Department of Enterprise Trade and Employment.

Who is covered by the Protection of Young Persons (Employment) Act?

The law is designed to protect the health of young workers, generally under the age of 18, to ensure that work during the school years does not put a young person’s education at risk and sets minimum age limits for employment, rest intervals, and maximum working hours.  The act also prohibits the employment of under 18s on late night work.

What is the Age Limits on Hiring?

For a regular job, then general minimum age is 16. Employers can take on 14 and 15 year olds on light work:

• Part-time during the school term (over 15 years only)
• As part of an approved work experience or educational programme
• During the school holidays, provided there is a minimum three week break from work in the summer

Any child under 16 years of age may be employed in film, theatre, sports or advertising under licence.

What is the Maximum Hours of Work per Week?

Under 18’s may not be employed for more than 40 hours a week or 8 hours a day, except in a genuine emergency. The maximum weekly working hours for 14 and 15 year olds are:

Early Morning and Night Work

How many breaks am I required to provide?

Exceptions

The full provisions of the Act do not apply to:

• Employment of close relatives
• Employment in fishing, shipping, or the Defence Forces

Duties of Employers

Employers must:

• See a copy of the birth certificate and, before employing someone under 16, must get the written permission of the parent or guardian.
• Keep a register containing the following particulars of each person under 18 employed:
• Full name
• Date of Birth
• Time work begins each day
• Time work finishes each day
• Rate of wages or salary paid per day, week, month or year, as appropriate
• Total amount of wages or salary paid to each person

Complaints

Complaints about breaches of the Act may be made in confidence to the Employment Rights Section, National Employment Rights Authority, Phone (059) 9178990. The Authority’s Inspectors have powers to go into places of work, question employers and employees and examine records. Parents may refer certain breaches of the Act to a Rights Commissioner.

Penalties

Offenders could face fines of up to €1,905 and an extra €320 a day for a continuing offence.

In 2009 a new government scheme allowed for employees to cycle to work affording employees, several benefits:

• Keep fit
• Cost Effective
• Environmentally friendly
• €1000 bicycle and equipment allowance

Yes you read that right! Your employer is able to provide an allowance of €1000 for any employee who wants to cycle to work.  Employers can provide a new bicycle or pedelec (bicycle equipped with an auxiliary electric motor) and associated safety equipment to employees who agree to use the bicycles to travel to work. They will be treated as a tax-exempt benefit-in-kind.

This tax exemption may only apply once in every 5-year period in respect of any one employee/director and the cost must be incurred directly by the employer. It is not permitted for the employee to purchase a bicycle and then seek reimbursement from the employer.

The scheme may also be implemented via salary sacrifice arrangements, whereby an employee agrees to forego part of his or her salary to cover the costs associated with the purchase of the bicycle and associated safety equipment. Where such salary sacrifice arrangements are implemented they must be completed over a maximum period of 12 months. In such circumstances, the employee will not be liable to tax or PRSI or levies on the salary sacrificed. The maximum amount of salary that can be sacrificed is €1,000.

According to the Revenue Commissioners, employees who work from home or otherwise known as e-workers, fall under one of the following categories:

• Work from home on a full time or part time basis
• Work some of the time at home and some of the time in the office
• Work while on the move with occasional visits to the office

The Revenue Commissioner has set specific tax guidelines for e-workers in relation to employees using both information and communication technologies located outside the office.

Computers and Equipment Costs to e-Workers

If an employer provides equipment to the employee such as computers, printers, scanners, software, etc. for the primary purpose of business, employees will not face a benefit-in-kind charge for the use of this equipment.

Home Expenses for e-Workers

Employees incur a certain level of cost when working from home such as additional heating and electricity costs.  Employers can make tax free payments of up to €3.20 per day to e-workers which cover the cost of any additional heating and electricity. This only applies to e-workers and not to individuals who bring work home with them in the evening etc…This does not prevent employees from making any specific explains claims if expenditure is in excess of this amount.

This article has only specifically discussed the tax implications on various aspects of e-Workers that are employed by an Irish company and where the e-Worker resides within the State.  There are other considerations to e-Workers such as using a car for work purposes and tax guidelines around motorcycle or bicycles used for work purposes. Another common scenario is employees working within Ireland for companies located outside the country.

Payroll tax law is a vast and complex area of business. It takes years of skills, training, and practice to identify and understand where an employee/employer should be paying taxes and where they are exempt.  Organisations are quickly realizing that allowing the experts manage their payroll services is a far more opportunistic way of managing this area of the business allowing owners and management to save time and money.

Contact Paycheck Plus today for a consultation on whether you could benefit from outsourcing your payroll.

Illness Benefits are afforded to Irish citizens by the Department of Social Protection if a person is unable to work due to an illness.  The Illness benefit is only applicable to those under the age of 66 and who are covered under PRSI.

As of 1 January, 2012, it was announced that Illness Benefits are to be taxed from the first day of payment. Prior to this change, the first 6 weeks were exempt from tax.

There is no provisions regarding sick leave entitlement, and whether an employee receives payment from his employer when absent due to illness is totally at the discretion of the employer, unless such a payment is specifically provided for in the person’s contract, or terms and conditions of employment.

Certain sectors of employment are covered by Employment Regulation Orders or Registered Employment Agreements, which provide enforceable rates of pay and terms and conditions of employment these sectors have statutory sick leave provision included in their terms of employment.

Illness Benefit is payable by the Department of Social & Family Affairs when a person is unable to work due to illness. To qualify for illness benefit, a person must be under 66 years of age and must meet certain PRSI contributions.

Taxation of Illness Benefit

There are a number of options for the taxation of Illness Benefit.

1.  The Taxable Illness Benefit should be added to the employee’s cumulative pay taxed accordingly – Add as additional pay and apply PAYE only to the Illness Benefit amount.

2.  The employer can reduce the employee’s annual SRCOP by the amount of his Illness Benefit and reduce the employees Tax credits by 20% of the Illness Benefit amount. The employer should then continue to operate the cumulative basis.   Notify Revenue about reduction

3.  The employer can exclude the taxable Illness Benefit and put the employee on a week/month 1 basis for the remainder of the year, from the date the employee returns to work.   The employee should than contact their local Revenue to have their tax certificate adjusted to reflex the amount of illness benefit received.  If a new tax certificate is received for the employee later in the same tax year, the employer should apply the new cert unless the matter has been first cleared with Revenue.

For more information on understanding Illness Benefits, contact Paycheck Plus for a consultation.

It’s those small decisions that can make or break the business.Those smart decisions to change the things we’ve always donehas been proven toreduce costs. As a decision maker itThose smart decisions to change the things we’ve always donehas been proven toreduce costs. As a decision maker it doesn’t take a lot of time or effort to put these in place.

Here are fivesmart decisions you can make to reduce your business cost and improve your bottom line

1.  Use Technology:

Technology now allows us to automate and streamline processes that weren’t available to us ten or even five years ago. Use of technology doesn’t mean expensive hardware and high consulting fees. Small and mid-sized businesses now have a vast selection of out-of-the box options to meet their budget requirements and business needs.

2.  Go Paperless:

Paper, ink, mailing, supplies all cost businesses a tremendous amount of cash at the end of the day. Digital invoicing, billings, payroll can significantly reduce costs throughout the year.

3.  Move Online:

Promoting your business online as oppose to direct mails, expensive advertising, flyers, or Golden Pages ads. The use of social media, email marketing and blogging are all ways to hit thousands of people that weren’t in your business reach with direct marketing.

4.  Adhere to Business Budgets:

This sounds like a simple one to follow yet so many small businesses don’t identify a budget only finding themselves knee deep in bills they hadn’t planned for. Daily business budgets can be a powerful business tool to reduce unnecessary costs.

5.  Outsource:

For small businesses, outsourcing is the way of the world today. With this option SMB’s have the ability to reduce employee overhead and several man hours doing things that might be better served by an expert. What can take one person an entire day can take just a few hours by someone who knows exactly what they are doing.

Making smarter decisions equals lowering costs which intern can lead to your business turning profits faster than the rest.

Are you prepared to invest more hours into managing your payroll? It looks like you are going have to in order to meet the upcoming changes in tax and payroll calculations.

Over the next 18 months, HR and Payroll managers will need to provide more detail to HMRC, which would usually be sent at the end of the tax year. Information such as employee’s date of birth, address and national insurance number, normal working hours, passport details, purpose of parental leave etc. will now be require in order for employees to be moved to Real Time Information (RTI). These changes are being made to improve the operations of PAYE tax systems and ensure that recipients of the new Universal Credit receive the right amount of benefits every month.

Up until March 2013 this program will be a voluntary act with the goal of mobbing 250,000 employers to this new model. Unfortunately you can’t dodge this bullet for long – by April, it will be compulsory that all employers provide the necessary details required to move to RTI.

Payroll systems are mostly managed in a ‘semi-manual’ way where manual checks and input are relied on by a person and not the computer program. This will not be reliable under the new RTI scheme and so it will be imperative that payroll records are error-free.

The fact of the matter is that payroll is already a difficult task to manage. Several hours are already being invested in by payroll, HR, business owners, and other personnel to ensure that employees are being paid correctly and that the organisations are deducting the correct amount of tax.

An unnamed Dublin Hospital was found overpaying their employees on sick leave by €200 a week because of confusion in the payroll system. The blame was said to be the payroll system which inaccurately calculated sick and maternity leave and did not take the employees benefits into account. This error has cost the hospital approximately €400,000 a year from overpaying absent staff and also paying too much in tax and social welfare contributions.

The truth of the matter is that tax calculations are a complex process to manage. Large hospitals may be able to swallow €400,000 a year in overpayment but a small business can’t afford to make casual mistakes when it comes to their payroll or any financial calculations for that matter. As Eamonn Corcoran, Chief Executive of Irish Payroll Association (Ipass) stated in response to this mishap, ‘the state has serious problems in the public sector in operating PRSI, PAYE, the universal social charge and pension deductions and levies with the result that some public bodies are paying over the odds. He continued to state that the people responsible for managing PRSI and PAYE deductions generally receive little or no training.

The truth is many small and mid-size Irish businesses are relying on employees to wear multiple hats and manage multiple areas of the business. In many cases owners are acting as the payroll and HR department due to cutbacks. Time spent on trying to figure out tax deductions for employees and understanding benefits and ways in which employees should be paid is time that could be spent focusing on the business and having these areas managed by experts.

Here is a simple guide that helps employers better understand how to calculate USC.

Employer’s Guide to Universal Social Charge

As an employer, you have probably been asked several times if Good Friday is an entitled day off for your employees. The answer in most cases is no.  The Republic of Ireland has 9 public holidays each year. Public holidays are sometimes referred to as bank holidays but the terminology is confusing.  Bank holidays are where banks and schools close for the day. Public holidays on the other hand are as follows:

• New Year’s Day (1 January)
• St. Patrick’s Day (17 March)
• Easter Monday
• First Monday in May, June, August
• Last Monday in October
• Christmas Day (25 December)
• St. Stephen’s Day (26 December)

As you can see, Good Friday is not a considered a public holiday and as an employer, you have no obligation to provide this day off to your employees.

Rules for Public Holiday Pay

Employees are entitled to one fifth of their average working week – in most cases for full time staff this will mean an entitlement to a full day’s pay for a public holiday.   with the exception of Part-time employees must have worked a total of 40 hours within the 5 week period prior to the public holiday to qualify for the entitlement.  They are entitled to one fifth of their average working week, averaged over the preceding 13 weeks worked.

Employees who do qualify are entitled to the following:

• A paid day off on the public holiday
• An additional day of annual leave
• An additional day’s pay
• A paid day off within a month of the public holiday

As an employer, understanding the laws and regulations of your employee’s payroll, the tax deductions, recent changes in USC, paid holidays and unpaid holidays, part time workers, and many other variations that come with managing payroll can be a complex task.  Here at Paycheck Plus, we understand these challenges are happy to help you.

Please see our ‘Employers Guide to Understanding Universal Social Charge’ as an extra resource to help you save time and money when it comes to streamlining your business.