In order to form a limited company, at least one person must be appointed as a director. This individual is responsible for forming the company and ensuring that it complies with all relevant legislation. However, there is no requirement for a limited company to have any employees. In fact, many small businesses are owned and operated by a single individual.
While this can make it easier to get started, it also means that the owner bears all the responsibility for the business. This can be a significant burden, particularly if the business is successful.
As a result, people who are thinking of forming a limited company should carefully consider whether they have the time and resources to run the business on their own.
Are company directors classed as employees?
There is no simple answer to this question. While company directors may technically be classified as employees, they often have a different set of responsibilities and are compensated differently than other employees. For example, company directors may be responsible for setting strategy, making decisions about investments and hiring, and representing the company to shareholders.
They may also be eligible for bonuses or other forms of compensation that are based on the company’s performance. As a result, while company directors may technically be employees, they are usually considered to be in a different class
Do I need to register my company as an employer?
If you’re thinking of starting your own business, you may be wondering if you need to register your company with HMRC as an employer. The answer is that it depends on a few factors, including whether you have any employees and how much you pay them. Generally speaking, you will need to register as an employer if you have any staff working for you, even if they are part-time or on a freelance basis.
You will also need to register if you pay your employees more than £112 per week. If you’re not sure whether or not you need to register, the best thing to do is to contact HMRC directly for advice. They can help you determine what your obligations are and make sure that you’re compliant with the law.
How and when to register as an employer
Before you can start employing staff, you must register with HM Revenue & Customs (HMRC) as an employer. This is so that you can deduct and pay Income Tax and National Insurance contributions from your employees’ pay. You can register up to 4 weeks before your first employee starts work. Registering online is the quickest way to do this.
You’ll need: • your company’s PAYE reference number, if you have one • the name, address and contact details of your business • to create a Government Gateway account – you’ll need an email address to do this. If you do not have an email address, you can get one for free from websites such as Google or Yahoo.
Once you have registered with HMRC, they will send you a starter checklist. This will tell you everything you need to do before paying your first employee. It is important that you follow the instructions on the checklist, as failure to do so could result in penalties.
For example, if you do not tell HMRC that you are an employer within 3 months of becoming one, you may have to pay a fine of £100.
To register as an employer, HMRC will require the following information about your company:
- company Unique Taxpayer Reference (UTR)
- full registered name of the company
- trading name of the business (if applicable)
- company registration number (CRN)
- nature of the business (e.g. plumber, electrical engineer, graphic designer)
- registered office address, business address, and business contact details
- date of the first pay day, or the first day you paid expenses or provided benefits to employees or directors
- number of employees, including directors
- whether you need to register for the CIS
- name and National Insurance number of one director
Once you’ve registered, you will need to incorporate PAYE into your payroll software and carry out the following payroll tasks on or before each payday:
- record each person’s pay (salary/wages and any other pay)
- calculate deductions from their pay (Income Tax, National Insurance, pension contributions, student loan repayments)
- calculate your employer’s National Insurance contribution (on earnings above £175/week)
- produce payslips for every employee and director
- report everyone’s pay to HMRC in a Full Payment Submission (FPS)
On the 19th of the following tax month, you will then pay what you owe to HMRC. However, you may be able to pay quarterly, rather than monthly, if you normally owe less than £1,500/month.