PAYE stands for Pay As You Earn, and it is a system that all Irish employers have to operate. To the uninitiated it is complex, which is why so many business owners use payroll services to ensure that they are compliant with the laws.
Every time a salary is paid, income tax, pay related social insurance, and universal social charge have to be deducted. This is not something that can be estimated, it has to be correct and paid to Revenue. This system ensures that over the year the right amount of deductions are spread evenly so that employees do not suddenly have a large bill to pay at the year-end.
How Do Payroll Services Calculate Income Tax?
There are two rates of income tax, 20% and 40%. It depends on the amount of earnings as to the rate band that has to be applied. There are also tax credits to be accounted for, which are amounts of tax-free pay that are taken from the gross pay before any tax is deducted.
Everyone is entitled to some tax credits and in certain circumstances, such as if the employee is over 65 years of age, a higher amount of tax credits is awarded. They are divided into either 52 weekly or 12 monthly even amounts to relate to paydays, so that no one pays more tax than they should.
Like many taxes in Ireland, this complex system needs to be operated correctly and within time limits to avoid incurring fines and penalties. As well as using payroll services, it is why companies also use company secretarial services. Being a limited company can have many advantages but it also carries with it extra responsibilities that cannot be ignored. Rather than run the risk of missing deadlines or getting something wrong, using company secretarial services is the simple answer.
How Do Payroll Services Calculate Pay Related Social Insurance (PRSI)?
PRSI are contributions made to the Social Insurance Fund, which helps to pay state benefits and pensions. All employees earning more than 38 euros a week have to pay this as long as they are over 16 and below 65 years of age.
There are different groups and varying bands, which have to be considered when deducting PRSI. There is also an employer’s contribution to this, which includes paying into the National Training Levy Fund.
Generally, the class of PRSI that has to be paid is decided by the nature of their employment, but some contribution classes are subdivided further into subclasses.
The more you delve into PRSI the more complicated it becomes, and if an employer is not certain at what rate they should be making the deductions they can ask for assistance from the department’s Scope Section. Alternatively, employer’s can use payroll services to save the hassle.
How Do Payroll Services Calculate Universal Social Charge (USC)?
USC is the third tax that is payable on an employee’s income if they earn more than 13,000 euros a year. If their income passes this level, USC is payable on their total earnings. There are a few exemptions to this tax, such as income from maternity benefit and a state pension. Among other incomes, statutory redundancy payments, foster care payments, and child benefit do not attract USC. It is also payable at different rates depending on the income.
It was introduced as an emergency measure in 2010, but has proved such a simple and lucrative form of taxation that it is not likely to be removed in the foreseeable future.
Can You Be Certain That Payroll Services Will Get It Right?
You need to be certain that the payroll services you use will get it right. There is no point in using this type of service unless you are sure. Using the payroll services of Kane Bergin & Company will give you peace of mind, as you can rest assured that everything will be done as and when it should be. They will even deal with any PAYE inspections for you, which makes sense, as they will have prepared the payroll and have the specialist knowledge to answer any questions.
Tax and levy rates in Ireland are constantly changing, as are employment laws. For the best advice from experienced payroll experts, call and let us take the stress off your shoulders.
You Run Your Business, Let Us Do The Rest
There is so much more to running a business than buying and selling at the right price. You can easily find yourself in the bad books of Revenue if you do not keep on top of all the administrative aspects, and could find yourself facing hefty fines and penalties. You will know your business better than anyone else and should concentrate on keeping it running successfully.
All the other parts we can take off your hands, and leave you to concentrate on what you know best. Our bookkeeping services will take away the burden of getting your VAT done correctly and on time. Bookkeeping is a vital part of any business, which is why some businesses have a dedicated member of staff to deal with it, and for the much larger companies there is sometimes a whole department.
There are times when either the size of the business, or the fact the owner does not want staff dealing with the finances, that outsourcing bookkeeping is the right way to go. There are other advantages, such as your records being handed to our accounting team prepared in the way we like them. As we can trust our bookkeeping team implicitly, this makes compiling the accounts an easier task, which means a lower accounting bill for the business. Of course, we compile accounts and deal with taxation for businesses that do not use our bookkeeping or payroll services, but they may take a little longer.
If you would like more information about all of our services, call and have a no obligation chat with one of our experts today. Just ring 01 969 6306, email us at info@kanebergin.ie, or complete our contact form and we will get in touch with you.