Employee setup can also be completed in six steps and requires that you collect a bit of information about each employee before you start. Although you can add an employee with just their name and join date, you won't be able to create a payslip until you have fully set up your employee.
After adding an employee you can change or complete any information you may have left out using Employee Â» Details from the left-hand main navigation.
- Required Setup Information - Information you should collect about employees before you start
- Basic information - Enter basic information like the Start Declaration, Employee Name and Join Date
- Personal information - Enter employees' personal information
- Contact details - Address and contact details for your employees
- Employment settings - Details of the employee contract and the nature of their employment
- Government settings - References and numbers to identify employees to HMRC
- Payment options - Information for payslip processing and delivery
- Opening Balances - Required when adding employees part way through a tax year
Required Setup Information
Before you can use KashFlow Payroll to create payslips, you must have at least one employee in your company for whom you have completed all the required setup fields.
If you already have payroll software that you are moving from, you should be able to collect this information from your existing software's employee information screen.
Information you'll need
- Join date - Date the employee started their current period of employment with your company.
- Employee address and postcode
- Current marital status and date of birth
- Tax code - Normally you'll get this from a P45 form for a new starter or your previous payroll system. If you don't have one you can temporarily use the current emergency tax code, which is the default supplied by KashFlow Payroll.
- Tax calculation method- Normally you'll get this from a P45 form for a new starter or your previous payroll system.
- National Insurance Number (NINO) and Category - If you don't have this information to hand (e.g. on a P45), or you can request it from HMRC.
- Employee banking information (optional) - If you plan to pay this employee by electronic transfer (BACs) you will need their bank account name, number and sort code to hand.
- Opening balances.
Step 1. Basic information
After setting up your first Company you will be guided through the process of entering your first Employee. The first step of the setup process asks for basic information like the Employee Name and Join Date.
KashFlow Payroll needs to know if the employee is an actual new starter (also called a joiner) or if youâ€™ve paid them before using some other payroll system. To find employee details; new starters usually have a P45 from their previous employer whereas employees that you have paid before will have details in your previous payroll system.
If you are entering an actual new starter then HMRC needs to know what kind of starter they are; please select A, B, C or â€˜unknownâ€™ if the employee has not given you enough information. The following factors determine exactly what Tax code you need to use for the new starter:
- Do they have a P45
- Does the P45 relate to this year, last year or an even old year
- Is the Tax Code on the P45 BR, 0T or D0
- Is the employee starting on or before 24th May or after 24th May
It is up to you to enter the correct Tax Code on one of the other tabs below, but KashFlow Payroll will set a default for you as best it can. Full HMRC guidance on setting the Tax code of a new starter can be found here www.hmrc.gov.uk/payerti/employee-starting/new-emp-info.htm
If the employee is, or has been, a director since 6th April then KashFlow Payroll needs to know the date that the directorship started (and ended if in the current Tax Year) and the NIC Calculation Method (National Insurance Contributions). A director can chose to have their NICs calculated in one of two ways:
- As Director: NICs are calculated cumulatively, that is to say on a Year To date basis like Tax normally is.
- Like Employee: NICs are calculated non-cumulatively; which is the way NICs are normally calculated for employees. However, in the last payment for the year (or the directorship itself) KashFlow Payroll will automatically recalculate NICs on a cumulative basis as required by HMRC.
Step 2. Personal information
In order to help HMRC identify an employee, especially a new starter, their full name and correct date of birth is required.
It is best to use the First Name and Last Name boxes to hold the full and correct employee name, as found on the birth certificate or passport, for example â€˜Antony Trenkerâ€™. The full name will be used on Payslips on when making RTI submissions to HMRC. The Known As box can be used for the informal or nickname of the employee, as used within the company, for example â€˜Tonyâ€™.
Step 3. Contact details
This employee setup tab gives KashFlow Payroll some address and contact details about your Employee, including telephone numbers.
Please note that HMRC require at least two lines of an employee's address. Therefore, you must enter at least one additional address line in the "Additional Address Lines" text area.
Step 4. Employment settings
This employee setup tab reflects some details of the employee contract and the nature of their employment, such as Job Title or Directorship start and end dates.
New Departments are setup under the Company menu and an employee can be assigned to one Department reflecting the main cost centre that their employment is in. Payroll figures can be analysed by Department from the Reports menu and individual Pay Items can even be assigned to a different department, for example, when an employee does some overtime to help another Department.
If the employee has left the Company then their Leave Date is shown. To set an employee as a leaver use the Leaver Action from their Dashboard.
Director Start and End Date
If the employee is or was a director of the Company then their directorship Start and End Dates are shown. To start or end a directorship use the Set Directorship action from their Dashboard.
Step 5. Government settings
Each Employee in KashFlow Payroll will have been some references and numbers to help them identify them to HMRC and in the RTI submissions. Furthermore, each Employee will be assigned some codes by HMRC to enable Tax and National Insurance Contributions (NICs) to be calculated correctly.
You are responsible for entering the correct Tax Code and the correct Tax Calculation Method. Full HMRC guidance on setting the Tax code of a new starter can be found here www.hmrc.gov.uk/payerti/employee-starting/new-emp-info.htm
Click â€˜Yesâ€™ for Student Loan deductions to appear on the Payslip. KashFlow Payroll knows how to calculate Student Loan repayments and whether the employee is exempt from paying them or not (based on earnings).
National Insurance Category
You are responsible for entering the correct NI Category
National Insurance Number
This is one of the key ways that HMRC uses to identify an employee; also known as a NINO. It is important that you do not enter a fake NINO. If you do not know the employee's NINO then you can use the Employees National Insurance Number Trace form from HMRC.
Step 6. Payment options
In order to process Payslips, deliver them and actually pay an employee, KashFlow Payroll needs a range of details.
KashFlow Payroll supports employees paid on a regular repeating weekly or monthly Pay Cycle. If you cannot see the option you want, make sure that you have specified a weekly or monthly Pay Date for the Company.
Is employee paid intermittently?
This field is included in RTI submissions but you can simply set this to â€˜Noâ€™ unless you know that this employee does not always get paid (commonly known as a casual labourer). KashFlow Payroll will detect when this option needs changing so you canâ€™t go wrong.
Hours Per Week
Please enter the normal contractual hours that the employee is expected to work according to their contract - not to be confused with the actual hours worked in any particular week. KashFlow Payroll will use the Hours Per Week to calculate an employeeâ€™s hourly Rate if you only supply a weekly Rate.
Payslip Delivery Email Address
You can choose to print payslips for the employee or get them to use the Employee Self Service facility. The employeeâ€™s email address is used for their Self Service login and to notify them when a new payslip is ready to collect.
Employee Self Service
KashFlow Payroll runs over the internet, so your employees can login and get what they need from KashFlow Payroll. Employees can collect their own current or historical payslips (sometimes called electronic payslips) so when you have closed a Pay Date there is nothing to print or deliver â€“ saving you time and paper.
Adding Employee Opening Balances
The Employee Opening Balances tell KashFlow Payroll what the Year To Date figures were before you started using KashFlow Payroll, so you only need Opening Balances once for the Year that you start using KashFlow Payroll and only if the employee was paid by you earlier in the year.
It is important to enter these Opening Balances from your previous payroll system before making a Payslip for the Employee because the Opening Balances may affect the Tax and National Insurance Contributions (NICs).
Opening Balances can all be zero if
- your Employee is simply a new starter (and therefore was not paid by you earlier in the year)
- you did not process any payroll for this Company earlier in the year (ie you are a new Company and have not paid anyone before)
- you start using KashFlow Payroll in the first week or month in April (the easiest time to start using a new payroll system)
If you have paid this employee before please enter the Employee Reference used by your previous payroll system. This will help HMRC to match this employee in the first RTI submissions that KashFlow Payroll makes. Note that you will only see this field if you indicated during employee setup that you had paid the employee before.