By Neilson Watts (Associate Product Manager, Sage One UK).
Most of us can understand that cashflow is vitally important to every small business. It’s the air we breathe, the water and food that will fuel and keep you going. Without it you’re dead so you’ve got to keep your finger on the pulse of your cashflow or your business may end up dying!
So how does HMRCs new Real Time Information (RTI) compliance for PAYE put your cashflow and health of your business at risk?
Under the current PAYE regime where you are submitting once a year to HMRC at Payroll Year End, it’s difficult for the HMRC to known how much your business owes in outstanding PAYE and NIC liability, so it’s easy to slip into flexible payment methods with HMRC, i.e. you might underpay them this month and then when your business can afford it overpay in another month or you might leave a balance until the end of the year to pay off. But from 6th April under RTI this will change.
One of the little known aspects of RTI is that HMRC will know from your Full Payment Submission (the information you send them electronically each time you make a payment to an employee) how much your business owes in outstanding PAYE and NIC liability and they will expect you to make that exact payment by the 19th of the following month. Failure to do so could result in HMRC imposing fines.
So, from 6th April 2013, you will need to keep an even closer eye of your businesses cashflow. You can do this by keeping track of what you are spending and more importantly getting better at chasing your customers for payment.
To help, we have two perfect solutions – Sage One Payroll to help you process your payroll in 4 simple steps and guarantee your RTI compliance and accompanied with seamless integration with Sage One Accounts you will quickly get a grip and finger on the pulse of your cashflow.