What is a PAYE scheme?

Jordan Macey

September 3, 2021

What is a PAYE scheme? guide
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Small Business Accounting

PAYE—or Pay As You Earn—is a system of income tax withholding by employers.

Tax and National Insurance contributions from your wages or occupational pension and sent to HMRC, before your employer pays you your wage or pension. Student loan repayments may also be deducted in this manner.

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10 new business obligations when hiring your first employee Guide

10 new business obligations when hiring your first employee

Being a solo entrepreneur is an exhilarating experience, but eventually, a successful business will create enough work for more than two or three people to handle.

This leads naturally to the hiring of your very first employee, maybe even more than one. However, there is a big difference between being self-employed as a solo contractor and being an official employer.

You may be used to taking care of your own income, taxes, and workplace concerns but as an employer, you are suddenly responsible for the livelihood of one or more other people. People to whom you will be their boss with all the nitty-gritty details packaged with it.

Fortunately, you're an ambitious and successful entrepreneur ready to take on the challenges of graduating from a solo contractor to an excellent employer.

To help you, we have put together a comprehensive list of your new responsibilities that manifest the moment you choose to hire your first employee.

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What is Retained Profit? Guide

What is Retained Profit?

Retained profits, or retained earnings are profits that a firm has earned to date (after deducting dividends or other distributions paid out to investors) and are retained in the company's accounts. In a balance sheet, retained profits are included under the owner's equity section.

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What is Statutory Adoption Pay? Guide

What is Statutory Adoption Pay?

It is the amount of money that must by law, be paid to an adoptive parent when he or she takes time off to adopt a child, or have a child through a surrogacy arrangement.

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What is Depreciation? Guide

What is Depreciation?

Depreciation is the measurement of the decline in the worth of an asset. Common methods of depreciation include: straight line, units of production, sum-of-years-digits and double-declining balance.

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What are Authorised Agents? Guide

What are Authorised Agents?

Through the agent authorisation process, a client is able to authorise an agent to deal with HMRC on their behalf. Further information is available on the HMRC website.

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What is an Annual Return? Guide

What is an Annual Return?

An annual return (AR01) is a document that all businesses are required to submit to Companies House each year. It details general information about a company, such as its ownership, capital position and management. The annual return has been replaced by the confirmation statement (CS01) since 30 June 2016.

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What are Current Assets? Guide

What are Current Assets?

Current assets are assets that are convertible to cash in less than a year.

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What is a Trial Balance? Guide

What is a Trial Balance?

A trial balance is a report that lists the balances of all general ledger accounts of a company at a certain point in time.

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What are Aged Creditors? Guide

What are Aged Creditors?

An aged creditors report shows who your business owes money to, as well as the amount owed at any given time.

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What are Aged Debtors? Guide

What are Aged Debtors?

An aged debtors report shows a list of customers (debtors) who owe your business money, as well as the amount owed at any given time.

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What are Bank Deposits and depositing cheques? Guide

What are Bank Deposits and depositing cheques?

A bank deposit involves placing money into an account with a banking institution. Depositing a cheque is one way to make a deposit. You can also deposit cash or make a funds transfer.

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What are Accruals? Guide

What are Accruals?

Accruals refer to revenue that have been earned, or expenses that have been incurred but aren't yet recorded in a company's accounts.

Examples of accrued expenses include wages payable, bonuses, interest on loan and goods received.

One example of accrued revenue is accrued interest.

On the balance sheet, accrued expenses are recorded under the current liabilities section, while accrued revenue are recorded under the current assets section.

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What is a PAYE scheme? Guide

What is a PAYE scheme?

PAYE-or Pay As You Earn-is a system of income tax withholding by employers.

Tax and National Insurance contributions from your wages or occupational pension and sent to HMRC, before your employer pays you your wage or pension. Student loan repayments may also be deducted in this manner.

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What is a Balance Sheet? Guide

What is a Balance Sheet?

A balance sheet is a financial statement that provides a snapshot of the financial condition of a company, showing how much it owns (assets), owes (liabilities) and the amount that is left over for its owners (owners' equity) at a specific point in time. It is typically completed at the end of a month or a financial year.

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What is Amortisation? Guide

What is Amortisation?

In business accounting, amortisation is a method of calculating the value of a business asset over time. It is the process of spreading out the cost of an asset over its useful life.

In relation to loans, amortisation refers to the spreading out of loans into a series of fixed monthly installments.

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What are Current Liabilities? Guide

What are Current Liabilities?

Current liabilities, otherwise known as short-term liabilities are due within a year.

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What are Tangible Assets? Guide

What are Tangible Assets?

Tangible assets are physical assets or property owned by a company, such as equipment, buildings, and inventory.

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What are Payment Terms? Guide

What are Payment Terms?

Payment terms indicate when payments should be made and how. These terms are usually included in the invoices generated by companies and sent to customers.

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What are Debtors? Guide

What are Debtors?

The term ‘debtor' refers to an individual or company that owes money, or is in debt to an individual or organisation. An example would be a customer that has purchased a product or service from your business. In the balance sheet, debtors are listed under the current assets section.

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What are Cost of Sales? Guide

What are Cost of Sales?

The cost of sales is the accumulated total of all costs used to create a product or service, which has been sold. The cost of sales is a key part of the performance metrics of a company, since it measures the ability of an entity to design, source, and manufacture goods at a reasonable cost.

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