Paying people questions

Bballdude

Hey guys!

First post here. Been an avid reader for some time but I've never needed to post.

I've got a business where I provide services/people to large organisations but I have no employees. Every person I provide is self employed.

These individuals are paid in cash and are responsible for their own NI and tax contributions. I want to stop dealing with petty cash and pay these self employed individuals directly into their banks accounts instantly upon completion of their said service.

Is this possible?
Will it cost me?
Do I need a special PAYE like system or can I just transfer it like when you borrow someone money via internet banking etc.?

Apologies if I'm not being very clear and concise.

Savvy_Sue

If these people are really self-employed rather than your employees, then all you need to do is pay them via internet banking as and when.

Bballdude

Basically they are sports workers (referees, umpires, coaches etc.). I'm going to be finding them the work but typically it's a one-off coaching session where they get paid in cash. The organisations are trying to eliminate cash which is where I come in. I find the work, provide the coach AND pay them, I invoice the company later on. I guess you could describe me and a middle lender/agent.

I phoned HMRC and they couldn't answer the question due to there being no senior technicians free?!

Just want to be all above board before things start taking off

Mistral001

This is a question for your bank to answer as you will probably need to use BACS.


The last time I received a payment this way I had to pay a £6 fee to my bank. If I had received a cheque as usual, I would have been free. I have a personal bank account. I do not know if it would cost me anything if I had a business account.

paddyrg

'Faster Payments' are usually free, and the cash arrives in a couple of hours. You can also initiate payments to people via their phone number etc with some banks phone banking apps, so this may make life really simple.

They sound as if they genuinely are self employed, but always worth checking even on a person by person level with HMRC - get it wrong and you may get lumbered with fringes to pay.

Also, find yourself a good factoring company - if you're paying before you're paid, there's a cashflow gap there. If your margins/mark-up aren't high enough to sustain the risk of poor payers, see how you can bring that money forward, even offering a discount for upfront payment (ie loading the back end payment with another 5-10% to cover interest and risk).

Savvy_Sue

Mistral001 wrote: »

The last time I received a payment this way I had to pay a £6 fee to my bank. If I had received a cheque as usual, I would have been free. I have a personal bank account. I do not know if it would cost me anything if I had a business account.

WHAT? I have never been charged for a BACS payment into any of my personal accounts: was it from within the UK?

pelirocco

Bballdude wrote: »

Hey guys!

First post here. Been an avid reader for some time but I've never needed to post.

I've got a business where I provide services/people to large organisations but I have no employees. Every person I provide is self employed.

These individuals are paid in cash and are responsible for their own NI and tax contributions. I want to stop dealing with petty cash and pay these self employed individuals directly into their banks accounts instantly upon completion of their said service.

Is this possible?
Will it cost me?
Do I need a special PAYE like system or can I just transfer it like when you borrow someone money via internet banking etc.?

Apologies if I'm not being very clear and concise.

It's very easy to pay by internet banking
Your bank will probably charge you a transaction charge

If they are self employed no need for paye

Check and double check that HMRC agree they are self employed

Check if you need public liability insurance

Get yourself a set of terms and conditions and get an agreement signed from the organisations you will be providing the services too

Probably a good idea to do the same for the people you are providing work for

Get business plan ,

Bare in mind you will probably be paying out long before you will receive payments

pelirocco

paddyrg wrote: »

'Faster Payments' are usually free, and the cash arrives in a couple of hours. You can also initiate payments to people via their phone number etc with some banks phone banking apps, so this may make life really simple.

They sound as if they genuinely are self employed, but always worth checking even on a person by person level with HMRC - get it wrong and you may get lumbered with fringes to pay.

Also, find yourself a good factoring company - if you're paying before you're paid, there's a cashflow gap there. If your margins/mark-up aren't high enough to sustain the risk of poor payers, see how you can bring that money forward, even offering a discount for upfront payment (ie loading the back end payment with another 5-10% to cover interest and risk).

Not sure the turnover will be high enough to warrant factoring fees

Seanymph

http://www.hmrc.gov.uk/payerti/employee-starting/status.htm

I assume you have looked at this guide, but from your description you would be an agency, or they would be workers who provide their services through an intermediary?

You need to be really really confident you can treat them as self employed, because the liability will fall to you if an assessment later on decides they aren't.

You must also have a contract i place.

The payment bit is the easy bit - internet banking, direct transfer.

paddyrg

pelirocco wrote: »

Not sure the turnover will be high enough to warrant factoring fees

Fair enough, but cashflow should be seriously considered if there's any gap at all between paying and getting paid. Maybe even offering the worker a choice of reduced fee for upfront payment or full fee when the client pays, or a low fixed fee advance on the day with balance when client pays. Anything is better than nothing.

Mistral001

Savvy_Sue wrote: »

WHAT? I have never been charged for a BACS payment into any of my personal accounts: was it from within the UK?

Yes it was within the UK: Danske Bank (Northern Ireland Bank Ltd)