Common Business Payroll Queries and FAQs in Ireland

Once you employ someone, you must register as an employer and navigate the world of payroll accounts, payroll & tax deadlines, and general payroll bookkeeping tasks.

We’ve compiled simple answers to guide you through the common questions about business payroll.

 

Getting Started…How do I Register for Payroll?

You register as an employer for payroll purposes on Revenue Online Service (ROS). This ensures you notify Revenue of your name, address, and intention to pay staff.

You must use the TR1 form or the TR2 form on ROS to register your employees. 

Your employee, on the other hand, must go on to the MyAccount portal on Revenue.ie and add their new job.

 

What Deductions must I apply to my Employee’s Pay?

As an employer, you must make the following tax and social insurance deductions from your employee’s gross pay:

1. Income Tax (IT)
2. Pay Related Social Insurance (PRSI) 
3. Universal Social Charge (USC)
4. Local Property Tax (LPT) deduction at source

This list includes the specific payroll-related taxes employers must collect in Ireland, namely PAYE and PRSI.

 

What is PAYE, and How Does it Work? 

PAYE is the acronym for the “PAY AS YOU EARN“ system whereby Income Tax, PRSI and USC charges are deducted from employees' wages every period they receive an income payment. 

You will need the employee’s PPS number to process their PAYE deductions.

There are various thresholds at which different rates of PAYE income tax may apply depending on the Government Budget set in any given year.

Revenue.ie has an excellent guide to help you calculate all the relevant PAYE deductions  

 

What are the Employer's Obligations regarding Social Insurance Contributions (PRSI)?

As an employer, you are responsible for deducting a PRSI contribution from every employee’s wage and paying for your share of their PRSI.

This contribution is paid to Revenue by the 14th of the following month.

The breakdown is as follows:

• Employers pay 8.8% Class A employer PRSI for weekly earnings up to €441.
• Employers pay 11.05% Class A employer PRSI on weekly earnings over €441.

If your employee is 66 or over, you do not have to pay PRSI on income.

Is was announced in Budget 2024 that Employer PRSI contribution rates will increase by 0.1% from 01 October 2024.

 

 

What is the Universal Social Charge?

The Universal Social Charge is another charge that is payable on your employee’s total income.

It applies to an employee as a deduction once their income reaches a minimum of €13000 per annum and varies as a percentage of income depending on the pay grade. It can range from a minimum of 0.5% to a maximum of 8%.

Full details of the rates can be seen on our 2024 Tax Rate Card

 

What is Payroll Software, and What Does it Do?

Given the complexities of payroll accounting and bookkeeping, investing in a tool to automate and manage your payroll processes is wise.

There are many different payroll software applications suited to both small business and larger-scale enterprises. Start using the free trials available via subscription-based payroll platforms, often in the cloud.

When deciding which payroll software service to subscribe to, consider these elements:

• Price of set up and the eventual price points that may graduate as you scale upwards. 
• Compatibility with visiting systems, especially its integration with Revenue
• Reporting facilities and analytics available 
• Take instruction for pension auto-enrolment and calculate and pay employee and employer contributions to the Central Processing Authority
• Storage capacity and backup options

Alternatively, you can outsource these business payroll services to payroll providers such as a payroll services company or contract a payroll accounting firm.

 

What is Pension Auto-enrolment?

Pension Auto-enrolment has been a discussed in Ireland for many years and it finally looks set to be introduced later this year.

Auto-enrolment is a new pension savings scheme for certain employees who are not already paying into a pension. These employees will be automatically included in the scheme once the scheme commences. Under the scheme, the employee, the employer and Government will all pay a certain amount into the employee’s pension fund.

 

How often do I need to Run Payroll and Pay Employees?

Your business payroll cycle could run weekly, bi-monthly, or monthly, depending on the contracted arrangements you may have in place with employees.

It is essential that regardless of the pay frequency, you must generate a payslip for each employee when you pay them.

 

What should I Include in a Payslip in Ireland? 

A payslip shows an employee’s payment and tax/ social insurance deductions.

You must generate a payslip for each employee to include the following details:

• Your employer name and registration number
• Employee details such as name and PPS number
• The pay period the current payment applies to 
• Gross pay
• Relevant tax credits applied and cut-off point.
• All deductions from gross pay in the current pay period 
• Summary of your total pay for the year so far, i.e. Year-to-Date amounts
• Net payment or Take-Home Pay to the employee
• Other non-tax related deductions that may be specific to the current circumstances of your employee such as their:
  • Pension contributions 
  • Union Subscriptions 
  • or any other contributions to a pre-agreed group scheme.
• One-off deductions may be applied in exceptional circumstances, for example, 
  • The purchase of uniforms
  • Reimbursement of expenses incurred 
  • A correction of a previous error

 

What are Enhanced Reporting Requirements (ERR)?

From 01 January 2024 employers are required to report details to Revenue of certain non-taxable payments made to employees. This new process is known as Enhanced Reporting Requirements (ERR).

Where employers make a tax-free payment for certain expenses or benefits, they must submit the details electronically to Revenue (before the payment date).

 

How Often Do I Need to Report Payroll to Revenue?

As an employer, put a big red circle around the 14th of each month when it comes to managing your payroll accounts!

You are obliged to report to Revenue once a month on the 14th of the following month of each payroll month. For example, January payroll accounts must be reported on February 14th.

 

How do I Report Payroll Information to Revenue Authorities in Ireland?  

All you have to do is submit your payroll accounts through (yes, you’ve guessed it!) ROS.

Head to the “My Services’ Tab,  then access the relevant payroll functions from the Employer Services panel. 

If your business uses payroll software, it should be a ROS-compatible payroll package that can automatically connect to Revenue.ie.

 

What Happens if You Don’t File and Pay PAYE Returns on Time?

It REALLY doesn’t pay to not pay on time when it comes to payroll accounts!

First of all, you will be charged interest on late payments. This will amount to 0.0274% per day on the amount due.

Then there are fines. There is also a €4,000 fine for each breach of the PAYE rules. In addition, the company secretary in your business would be liable to a separate penalty of €3,000 for each failure.

It makes sense to outsource your payroll services too, if you’re too busy.

 

What Records do I need to Keep for Payroll Compliance Purposes?

Here are the items you must document and file away safely for full payroll compliance:

• RPNs
• Payslips
• Travel and subsistence records 
• Mileage claims 
• Reimbursement information
• Pension contributions
• Small benefits
• Remote working allowance

Revenue authorities require these records be kept for six years. 

 

How do I Manage my Payroll if I am the Director of my Company?

If you are taking a salary from your company, the company needs to register you as an employee for payroll. You also must file a tax return personally.

 

Why Do People Decide to Outsource Payroll?

Outsourcing makes a lot of sense if you do not have the resources to employ a full-time accountant or have a small business, which doesn’t leave you much time for paperwork.

Here are some practical (and personal) reasons why outsourcing accounting and payroll services could be the solution for you:

• Get peace of mind - just knowing that an expert is taking care of your payroll paperwork frees your mind to focus on the things that really matter to you like growing your business and strategising.
• Saving time is saving money - It is a more efficient and profitable use of your time to pay someone who can execute the job faster than you can. This truism is even more apparent when you bill by the hour. Don’t let payroll get in the way of you maximising your revenue.  
• Avoid dealing with Revenue on your own - Dealing with the tax authorities can be complicated, so this is a surefire way to make sure you avoid making any mistakes when submitting your payroll accounts.
• Accurate payslips make for happier employees - If you care about a happy workforce, it really matters that they get paid on time and in the correct amounts. You have a duty of care to the people who depend on you for their living wage.
• Punctuality means no penalties - NOT getting payroll accounts done on time will cost you heavily if you incur fines and interest. If you’re focused on growing your business, don’t let tax and payroll accounting deadlines get in the way.

 

Are you interested in Outsourcing your Payroll?

Doing your payroll homework makes a lot of practical and financial sense if you are about to become an employer for the first time or intend to scale up your business. There are clear procedures for setting up, executing, and documenting your payroll accounts as you liaise every step of the way with Revenue. We certainly hope this little guide has helped!

If you are looking to outsource your payroll needs, you can always consult with a member of our team here at TaxAssist Accountants.

Start the conversation here. Book a free initial consultation!

 

 

 

Date published 31 Jan 2024 | Last updated 8 Feb 2024

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.