What is a P45 Form and Why Does it Matter?
When you’re a business owner, one of the most important documents that you will ever need is your P45 form. What is it, and why does it matter? Simply put, a P45 form is an employee severance document. It’s essentially a record of your employee’s time with your company, including their salaries, bonuses, and other benefits. This document is extremely important because it can help you reconstruct your payroll expenses if something happens to one of your employees. In addition, a P45 form can also give you some peace of mind if an employee decides to leave your company without giving you notice. At the end of the day, having a properly executed P45 form is essential for any business owner. If you don’t have one already, now is the time to get started.
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What is a P45 Form?
A P45 form is a document that is used by businesses to report changes in their staff. It is also used by companies when they are restructuring or when they are going through a merger. The form has a lot of information on it, including the name, address, and telephone number of the employee. It also has the employee’s occupation, salary, bonuses, and other information.
I’ve Changed from Sole Trader to Limited Company, but my Employee does not have a P45
Sage 50’s incredible features have assisted businesses in performing their accounting activities with the desired efficiency. Sage 50 also assists businesses in better managing their employee records. They can have better monitoring of employee issues and can also generate useful reports with just a few clicks. The company management can use these comprehensive reports to develop future strategies. The payroll module in Sage 50 has indeed made lives easier for employers, to say the least.
In this blog, we are going to address one query received from quite a few Sage users and this is related to the Sage payroll functionalities. The users have informed us that they are not sure how to make necessary changes after changing their business status from sole trader to limited company, particularly when their employees do not have a P45. If you are having a similar query, we request you to go through this blog. Here, we will discuss what you should do when your business status changes.
Read Also : How to Print P32 Employer Payment Record
What to do when my Business status Changes?
If your business status changes from a sole trader to a limited company, it is your duty to inform the HMRC of this change. How to do this depends on the present set up of your business and the changes you are going to make in the near future. You may be asked to perform the procedures for the sole trader as normally done at the Payroll Year End. Moreover, you need to set up the limited company as a whole new business altogether.
Steps to Perform in your Present Company
When your company status changes from sole trader to a limited company, you need to set up a new Payroll registration with the new PAYE reference. In addition, you need to shut down your present PAYE scheme.
To do this, you must finish your final payroll tasks in the proper order, before notifying HMRC about the closure of your PAYE scheme. You can close down your company’s payroll through the Sage Business Cloud Payroll and inform the HMRC accordingly. Here are the steps to follow-
- Set each of your employees as a leaver with effect from the date the business stops operating as a sole trader.
- Finish the final pay run as a sole trader and submit the final FPS (Full Payment Submission).
- Review the P11 values.
- Submit the final EPS. Here, you should check mark the ceased trading box and provide the cessation date as well.
- Distribute P45s to all your employees.
Steps to Perform in Your New Company
- Sign up for a fresh Payroll service.
- Log in to the new service
- Click on New Company.
- Set up the calendars for your payday
- Create your employee records
- from the individual P45s, enter the relevant details
What Are the Different Parts of a P45 Form?
A P45 form is an employee identification form and is used by companies to document the employment of their employees. The form includes a variety of sections, including: name, address, date of birth, social security number, etc.
The purpose of a P45 form is to provide verification that an employee is still employed with the company and to document any changes in employment status. If an employee leaves the company or is terminated, the P45 form can be helpful in tracking down any unpaid wages or benefits that may be due to them. Additionally, if an employee files for bankruptcy, their P45 form can help creditors determine whether they are owed money.
Also Read : Update an Employee’s Tax Code P6 or P9
Conclusion
We hope the discussion above would help you a great deal to understand what to do when your business status changes. If you are still having any queries regarding the same, you may get in touch with some seasoned Sage professionals.
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Frequently Asked Questions(FAQs)
What are the Important points to consider while intimating the HMRC about the change in Business Status?
You should keep in mind the following points to consider while intimating the HMRC about the Change in Business Statues–
1. The mandatory change of employment start date may affect the Statutory Adoption Pay, Paternity Pay and Maternity Pay of the employees
2. The 8 weeks of gross pay on which the calculation for Statutory sick pay is determined is not available after a change in business status.
3. If you have processed SSP in the 8 weeks before changing the business status for any employee, you must enter the historical SSP information for the system to calculate linked periods of incapacity for work.
4. Any default payment and deduction values that were set up in the old business must be set up in the new business as well.
How to Delete an Existing Employee Record in Sage 50?
Please follow the steps below to delete an existing employee Record in Sage 50–
1. Go to the Employees & Payroll Navigation Center.
on the right hand side of the window, click the Employees list
2. From the employee IDs, select the Id of the employee whose record you need to delete
3. For that particular employee, click to open the Maintain Employees & Sales Reps window
4. Click on the Delete icon
5. A prompt will appear on your screen, asking you ‘Are you sure you want to delete this record?’
6. Click Yes
7. It will delete the employee record
Please Note: You will not be allowed to delete the existing record of an employee record if any transaction has been attached to that particular employee.
How can I Record Employee Expenses in Sage 50?
Employee expense reimbursement is a common practice in many businesses. There are two ways to accomplish this in Sage 50. Some employers opt to deduct the expenses from an employee’s net pay. Some others pay for the expenses separately. You can record employee expenses in Sage 50 in both of these ways-
1. You can record the expenses through journals, for adding the expenses to the net wages of an employee.
2. For reimbursing the employee separately, you can set him up as a bank account in Sage 50
