Why You Should Get Outsource Payroll Services for Your Business
Payroll is vital in the operation of a business, but it can be a tiring and time-consuming responsibility which is why Outsource payroll services should be considered. Imagine processing your employees’, withholding taxes, leave pay, and other benefits without the needed expertise—the risk of committing errors is high, which may affect your legal compliance.
But as outsourcing becomes apparent in the business industry, you can let an external service provider handle your payroll, giving you peace of mind and confidence. Keep reading to learn more facts about outsourcing payroll services in this blog!
7 Surprising Facts About Outsource Payroll Services
As a business owner, time cannot be wasted. Every second, whatever your industry is, you can talk and provide services to your clients, market and sell your products, or manage your operations. Instead, you have to use this time to compute your employees’ salaries and taxes.
With the help of outsourced payroll services, you no longer need to think about such administrative tasks. You can allot more time to activities that are value-adding to the core functions of your business.
And suppose you have a human resource department instead of payroll computations in your company. In that case, they can focus on their primary task, which is people management, such as implementing projects and policies to help employees be more productive and engaged with each other.
If you decide to retain your payroll management in-house, you must have a payroll staff with enough knowledge of the involved accounting principles and legal requirements on payroll computation. In addition, you will need high-quality software for more accuracy of records and to reduce the risk of human error.
As your business scales up, with increasing employees, you will also need to expand your payroll department, which means additional resources are required.
Laying down the costs that entail in-house payroll management, outsourcing can be less costly than doing it in-house, especially if you have a growing business that will most likely have more employees.
Improve Return on Investment (ROI)
One of a business’s key financial performance indicators is its ROI, which outsourcing payroll functions can massively improve.
More income flows with lower expenses and more time to grow the business continuously. Moreover, with outsourcing, you don’t need to obtain costly payroll software and maintain additional hardware for it to function.
With outsourced payroll services, your payroll is managed with the latest software the subcontract service provider uses. Since they are specialists in this business process, they invest in the best software and system and use them to support your needs.
Once the payroll management is outsourced, the service provider will be responsible for correct and on-time payments, efficient payroll records, and answering employees’ queries regarding their salaries and benefits.
The effect of an efficient process on the employees is higher productivity. If their concerns are resolved quickly, and they get their salaries on time, they will focus more on their work. Additionally, this reduces the risk of high turnover of employees since they know they are being taken care of by the company.
Dedicated Payroll Professionals
For most businesses, payroll processing is just a small part of a large scheme. Yes, it is essential, but with other tasks needed within the company, it can take a lot of work periodically. On the other hand, payroll management providers have a team of experts dedicated solely to payroll.
These experts are trained to do specific tasks related to payroll functions. However, the quality will still vary depending on your chosen service provider. Of course, it is undoubtedly better than the internal capabilities of most companies with different focus industries.
Improved Compliance and Accuracy
Leaving your payroll processes to the hands of third-party experts means escaping the need to worry about complying with laws, tax regulations, and their dreaded deadlines. You can sit back and relax as they do everything for you.
And with their updated system and expert staff in place, the accuracy of the computations is significantly higher compared to doing it in-house.
Updated with Changes in Regulations
Payroll management comes with complying with the laws and regulations, and we know these are changing. These updates to the law should be well-implemented in the processes and should not be left behind by payroll managers.
However, in reality, it can be challenging to stay updated at all times, especially if the staff is less dedicated than payroll service providers who do payroll management as a business.
Having your payroll management outsourced will give you the confidence that you have a set of experts with enough knowledge and are capable of interpreting and implementing any changes.
Frequently Asked Questions
What is the advantage of outsourcing payroll?
As discussed in this blog, the most significant advantage of outsourcing payroll services is its ability to help a business save cost and time. Another one is the increased accuracy of payroll records and efficient payroll management.
Lastly, since external experts have sufficient knowledge and training about payroll functions, you have confidence that your business complies with the laws and regulations regarding the correct payment to your workers and the right amount of tax to remit.
What is the risk associated with payroll outsourcing?
Since you need to hand over some sensitive and confidential information about your employees, data security may be at risk. However, high-quality service providers care about their reputation in the industry, so there is a low chance of them breaching the non-disclosure clause in your contract.
They also ensure they have encrypted servers and firewalls on their payroll systems, so the risk of data security loss from outside is slim. However, this risk will never completely go away.
Outsourcing payroll services has its advantages, but whether you should apply it to your business still depends on the nature of your operations, needs, and capabilities. It is best to study the benefits and the risks this decision entails. You may check our UK Payroll Services.
Value Added Tax (VAT) is a tax levied on goods and services in the United Kingdom (UK) and many other countries worldwide.
For UK businesses, VAT can be complex and challenging, with many rules and regulations to follow. However, understanding the basics of VAT is essential for any business that wants to operate legally and efficiently.
This blog will explore UK VAT for E-Commerce and General Trade. After reading this, you will better understand how VAT works and how to manage it effectively for your business. So, let’s dive in!
UK VAT for Ecommerce and General Trade
UK VAT for Ecommerce: What is VAT?
Value Added Tax (VAT) applies to sales of goods and services. It is a type of indirect tax collected by businesses from their customers on behalf of the government.
Charging of VAT is involved at every stage of production or distribution, from the manufacturer to the wholesaler and from the wholesaler to the retailer. The final consumer then pays the VAT included in the price of the product or service.
How does VAT work?
VAT is charged on selling goods and services at the current rate of 20%. However, some goods and services are subject to a reduced rate of 5% or are exempt from VAT.
Usually, VAT is already included in the price of a product or service, but it can also be shown separately on the invoice for clarity and transparency to the customers.
If you are a VAT-registered business, you must charge VAT on the goods and services you sell and also pay VAT on what they buy for your business, such as the cost of materials, supplies, support services, etc.
But the good thing is that you can use the VAT you paid on your business purchases to lower your VAT liability. With that, the difference between the collected VAT on sold goods (output VAT) and the paid VAT on purchases (input VAT) must be remitted to HM Revenue and Customs (HMRC).
If the annual turnover of your business exceeds the VAT threshold, currently £85,000, it should register for VAT. And if you expect your business turnover to exceed the threshold in the next 30 days, you must also register.
If your business is below the threshold, you can also register voluntarily, but you are not required to do so.
However, whether mandatory or voluntary, once you register your business for VAT, you must charge VAT on all taxable goods and services you sell and submit regular VAT returns to HMRC. The frequency of VAT returns depends on the turnover of the business.
VAT for E-Commerce
Regardless of your business type, whether you are an e-commerce seller, you must also register for VAT if your annual turnover exceeds the VAT threshold. This applies to both UK-based and non-UK-based e-commerce businesses.
If your business is based outside the UK but sells goods to UK customers, you must register for VAT in the UK and charge VAT. You must also submit VAT returns to HMRC.
However, it will be another case if your business is based in the UK but sells goods to customers in other countries. You may have to register for VAT in those countries and charge VAT on the sale. This depends on the VAT rules of the customer’s country.
VAT for General Trades
The standard scheme of VAT applies to General Trades. The process is straightforward since they usually do not involve cross-border sales, unlike e-commerce businesses.
VAT is charged on goods or services at the point of sale, whether in-store or through a traditional sales channel. The VAT is then collected by the business and remitted to the government regularly.
Frequently Asked Questions
What are the consequences of not registering for VAT if my business exceeds the VAT threshold?
If your business exceeds the VAT threshold and fails to register for VAT, you may be subject to penalties and interest charges. HMRC can also take legal action to recover any unpaid VAT.
You may also face criminal prosecution if you knowingly fail to register for VAT. The penalties for VAT fraud can include fines, imprisonment, and seizure of assets.
In addition, if you don’t register for VAT when you should, you won’t be able to claim back the VAT you have paid on your purchases. This can increase your costs and reduce your profitability.
How can I determine whether a product or service is subject to VAT?
As mentioned in this blog, most goods and services are subject to VAT at the standard rate of 20%. However, some goods and services are subject to a reduced rate of 5% or are exempt from VAT altogether.
In addition, if you’re unsure whether a product or service is subject to VAT, you can seek advice from a qualified accountant or tax adviser.
How can I simplify the VAT process for my business?
The VAT process can be complex and time-consuming, especially for businesses new to VAT or with a high volume of transactions. However, several ways exist to simplify this and reduce the administrative burden on your business.
One option is to use accounting software that is designed explicitly for VAT. This software can automate many VAT processes, such as calculating VAT amounts and generating VAT returns.
It can also help you to stay compliant with VAT regulations and reduce the risk of errors. Another option is to outsource your VAT compliance to a specialist firm. This can be particularly useful for businesses with complex VAT issues or who lack the in-house expertise to manage VAT effectively.
A specialist firm can provide various services, including VAT registration, return preparation, planning, and compliance advice
VAT is a complex tax that can be difficult for businesses to understand and manage. However, it is an integral part of the UK tax system and a significant revenue source for the government. If you need clarification on your VAT compliance, check out Sterlinx Global.
Are you a UK Amazon FBA seller looking to expand your business into the US market? While this can be an exciting opportunity, you should know about the complexities of US sales tax.
As a UK seller, you may need to become familiar with the US tax system, and navigating the sales tax laws can be overwhelming. However, understanding the basics of US sales tax is crucial for ensuring compliance and avoiding penalties.
This blog post will guide you through everything you need to know about US sales tax for Amazon sellers.
USA Sales Tax for Amazon Sellers in the UK
What is Sales Tax?
A sales tax is a tax on the sale of tangible goods and some services. Unlike VAT in the UK, sales tax is imposed at the state level in the US, and this means that the rate and rules vary depending on the state where the sale takes place.
The sales tax rates can range from 0% to over 10% on the state and local jurisdiction. This can be confusing, especially if you sell your products to customers in multiple states.
What is Nexus?
Nexus is a legal term that refers to a connection or presence in a state. As a UK Amazon FBA seller, you may have nexus in a state if you have a warehouse or inventory stored or are selling your products in that state.
The rules for determining nexus can vary by state and be quite complex. If you have nexus in a state, you may be required to collect and remit sales tax on all taxable sales made to customers in that state.
Sales Tax Permit
A sales tax permit is a document that allows a business to accumulate and remit sales tax to the appropriate state tax authorities. A sales tax permit is generally required before a company can collect sales tax.
The requirements to have a sales tax permit vary by state, but businesses must provide certain information about their operations, such as their legal name and address, type of business, and other identifying information.
Some states may also require additional information, such as a description of the products or services being sold, the estimated volume of sales, and other business-related information.
How to Manage Sales Tax for Amazon Sellers
Once you have registered for a sales tax permit, managing your sales tax obligations is essential. You must accumulate sales tax on all taxable sales made to customers in states where you have nexus.
This typically involves adding the appropriate sales tax rate to the price of the goods or services sold and then regularly remitting that amount to the state tax authority.
Sales Tax Automation Software
If registering for a sales tax permit in each state where you have nexus seems tedious, there is an alternative option. You can use sales tax automation software to help you manage your sales tax obligations.
These software tools can help you determine where you have nexus, calculate the correct sales tax rate, and even file your sales tax returns on your behalf.
While using sales tax automation software may cost you some money, it can save you a lot of time and hassle in the long run.
Frequently Asked Questions
What happens if I fail to collect or remit sales tax?
Failing to collect or remit sales tax can result in quite hefty penalties and fines. The rules may vary in each state regarding sales tax, but generally, the penalties for non-compliance can be a big deal.
You could face fines, interest charges, and even legal action if you fail to comply with sales tax regulations, which you do not want to deal with.
In addition, it’s worth noting that the tax authorities take non-compliance very seriously, and penalties can accumulate over time.
Therefore, it’s essential to understand your sales tax obligations and ensure that you collect and remit the correct sales tax amount to the appropriate state tax authorities.
Can I be exempt from collecting sales tax?
There are some exemptions from sales tax, like resale or certain types of products. However, the rules for exemptions can vary by state and can be quite complex.
For instance, some states may exempt clothing and footwear from sales tax, while others do not.
Additionally, some states may require a specific exemption certificate for a customer to be exempt from sales tax, while others may allow a general resale certificate.
It’s a bit complicated, so it’s a good idea to consult a tax professional for personalized advice on exemptions since the rules can be pretty specific and may require documentation to support the exemption.
What if I need to correct a mistake on my sales tax returns?
If you make a mistake on your sales tax returns, you should correct it immediately. Depending on the type of mistake, the process for updating it may vary.
For example, if you underreported your sales tax, you may need to file an amended return to correct the error. While if you overreported, you might need to request a refund from the state tax authority.
If left incorrect, some mistakes may result in penalties or interest charges, so you must correct them as soon as possible to minimize the potential impact.
In addition, keeping detailed records of your sales tax returns and related documentation is a good idea in case of an audit or other inquiry from the state tax authority.
Staying compliant with US sales tax regulations is crucial for avoiding penalties and protecting your business. We hope this blog post has provided helpful insights and tips for managing your US sales tax obligations as a UK Amazon FBA seller.
As always, it’s important to consult with a tax professional for personalized advice and guidance. Check out Sterlinx Global for Amazon FBA accountants.
If you are an e-commerce or Amazon FBA seller struggling to navigate the complex world of VAT, look no further, as OSS VAT can simplify your VAT compliance. Keep reading to learn all about OSS VAT.
OSS VAT for E-Commerce and Amazon FBA Sellers
Value-added tax (VAT) is a consumption tax levied on goods and services in many countries worldwide.
In the European Union (EU), VAT is a significant source of revenue for member states. It has a considerable share in ensuring the functioning of the EU’s single market.
To address challenges in VAT compliance, the EU has introduced two new VAT schemes: the Import One-Stop Shop (IOSS) and the One-Stop Shop (OSS).
In this blog, we will focus specifically on OSS, explaining how the OSS VAT system works, who can benefit from it, and what e-commerce sellers need to do to comply with its requirements. Let us start!
What is the traditional EU VAT system?
If you are selling goods to customers in multiple countries in the EU, which is likely the case if you are an e-commerce seller, you have no choice but to register for VAT in each country you have customers and file separate VAT returns.
This is how the traditional EU VAT system worked. Imagine the hassle and headache it can bring for small business owners.
But thanks to OSS, or One-Stop-Shop, a simplified VAT system made possible by the EU on July 1, 2021, the VAT compliance process for businesses that sell goods and services online to customers in other EU member states has been easier than before.
What is OSS, and how does it work?
With the tedious process under the traditional VAT system, it is undoubtedly a relief to use OSS since you are only required to register for VAT in a single EU member state and then file a single VAT return for all your EU sales.
As a result, if you sell goods to customers in different EU countries, you no longer need to register for VAT in each country.
However, remember that not all sales can be processed under OSS VAT. Only sales of goods and services to customers in other EU member states can be filed through OSS, and sales to customers outside the EU or your home country are subject to the traditional VAT rules.
What Can E-Commerce Sellers Do?
It is truly a game-changer for e-commerce sellers to use the OSS VAT system when complying with VAT regulations. To improve your VAT compliance through OSS, remember the following essential steps:
Register for VAT in a single EU member state
Before availing yourself of the OSS VAT system for your e-commerce business, you will first register for VAT in a single EU member state where you have a fixed establishment, such as a warehouse or office.
Collect the correct VAT rate from your customers
Collection of VAT is done upon sale with the applicable VAT rate. Keep in mind that the VAT rate will depend on the country where your customer is located.
Report and remit the VAT due on your sales
You can use the OSS VAT system to file sales to customers in other EU member states instead of having multiple VAT returns. You need to file a single VAT return for all your EU sales and pay the VAT due to the tax authority in the member state where you are registered for OSS VAT.
To further guide you on your VAT compliance, you can seek professional tax advice from an accountant. They will help you navigate the complex VAT rules and regulations that apply to your business and ensure that you are compliant with all relevant requirements.
Frequently Asked Questions
Do I still need to comply with local VAT rules in each country where I have sales?
This is a common question that many e-commerce sellers have when it comes to the OSS VAT system.
The good news is that if you are registered for the OSS VAT system and have already reported and remitted VAT on your EU sales using the system, you no longer need to comply with local VAT rules in each country.
Can I claim input VAT through the OSS system?
Unfortunately, the answer is no – you cannot claim input VAT. The OSS system only accommodates reporting and remitting the VAT you collect on your sales to customers in other EU member states.
If you purchase goods or services for your business, you can only claim input VAT in the member state where you are established for VAT purposes (i.e., the country of origin of your business).
How does OSS differ from IOSS?
The main difference between the IOSS and OSS schemes is the type of goods to which they apply.
The IOSS scheme applies to distance sales of low-value goods imported into the EU. In contrast, the OSS scheme applies to sales of goods and services supplied within the EU, whether they are distance sales or not.
As an e-commerce seller, you should understand the differences between the IOSS and OSS schemes and choose the most appropriate for your business needs.
If you sell low-value goods imported into the EU, the IOSS scheme may be your best option. On the other hand, the OSS scheme may be more suitable if you sell a wide range of goods and services within the EU.
OSS VAT system is a great tool for e-commerce and Amazon FBA sellers who sell goods and services to customers in other EU member states. We hope this blog can help you comply with EU VAT regulations.
You can always seek professional advice from Sterlinx Global for specific guidance on your VAT compliance.
Are you a sole trader in the UK wondering whether you should get Sole traders VAT registered?
You may feel overwhelmed by the prospect of registering for VAT or unsure how it could benefit your business.
In this blog post, we’ll explore why and how sole traders become VAT registered in the UK and what it means for your business.
Sole Traders’ VAT Registration: Why and How?
Sole Traders VAT: Why get registered?
VAT, or Value-Added Tax, is a tax that is added to the price of most goods and services.
As a business owner, you may charge VAT on the products or services you sell and then pay this VAT to HM Revenue & Customs (HMRC) after deducting any VAT you have spent on your business expenses.
The VAT threshold in the UK is currently £85,000 (as of 2023), which means that if your business turnover exceeds this amount in 12 months, you must register for VAT.
There are some benefits to becoming VAT registered as a sole trader, including:
Being VAT registered can make your business look more professional and established, which can help to build trust with customers and suppliers.
Claiming back VAT
If you’re VAT registered, you can claim back the VAT you’ve paid on your business expenses, and this can reduce your VAT liability and improve your cash flow.
If your competitors are VAT registered, not being registered may put you at a disadvantage. Registering for VAT can level the playing field and potentially increase your sales.
How to become VAT registered?
If you need to become VAT registered, the process is straightforward. Here are the steps you’ll need to take:
1. Check if you need to register
As mentioned, if your business turnover exceeds £85,000 in 12 months, you must register for VAT. If your turnover is below this threshold, registration is optional, but you may still choose to do so if it makes financial sense for your business.
2. Gather information
Before registering, you’ll need to gather information about your business, including your VAT taxable turnover, business bank account details, and business activity information.
3. Register online
You can register for VAT online through the HMRC website, and you must create a VAT online account and complete the online registration form.
In addition, you also need to provide your business details, including your trading name, address, and contact details.
4. Wait for confirmation
After you’ve submitted your registration, you’ll receive a confirmation from HMRC within a few weeks. Once you’ve received confirmation, you can start charging your goods and services VAT.
What are the obligations of being VAT registered?
Once you’re VAT registered, there are certain obligations you’ll need to fulfill:
As a VAT-registered business, you are required to charge VAT on the goods and services you sell. This VAT amount needs to be included on the invoices you issue to your customers.
It’s important to understand the VAT rules and regulations around when and how to charge VAT to ensure that you’re charging the correct amount.
Submit VAT returns
It’s mandatory for VAT-registered businesses to submit VAT returns to HMRC every quarter. These VAT returns provide details of your VAT sales and purchases during that period. You’ll need to pay any VAT due to HMRC by the deadline specified in the return.
Keep accurate records
For at least six years, it’s important to maintain accurate records of all your VAT transactions, including invoices, receipts, and any adjustments made to VAT. These records should be easily accessible and available for inspection by HMRC.
Comply with VAT rules
As a VAT-registered business, you must comply with the VAT rules and regulations set out by HMRC, including VAT rates and exemptions, and ensure you charge the correct amount of VAT on your goods and services.
In addition, it’s important to keep up-to-date with any changes to the VAT rules that may affect your business
Frequently Asked Questions
What if my business turnover is close to the VAT threshold?
Consider registering for VAT voluntarily if your business turnover is near the VAT threshold. This can help you avoid penalties for late registration and give time to adjust to the new requirements.
Although remember that once you register, you’ll need to start charging VAT on your sales and filing VAT returns, so factor in the extra time and effort required.
What happens if I don’t comply with VAT regulations?
It depends on the severity of your non-compliance. For late filing and payment, you may pay interest and penalties. For errors or omissions on your VAT returns or records, HMRC can investigate and potentially take legal action against you.
In severe cases like deliberate fraud or evasion, you could face criminal charges, fines, and even imprisonment.
How can I keep track of my VAT records and returns?
This task can be a headache, but plenty of tools and resources are available to help you.
Essentially, you need to maintain records of your sales and purchases to aid in calculating output and input VA. Tools like the VAT online account and third-party accounting software can ease all these.
However, you must choose reputable tools compatible with HMRC’s systems.
Becoming VAT registered as a sole trader can give your business credibility, tax benefits, and competitive advantage. If your business turnover exceeds the VAT threshold, you must register for VAT, and if it doesn’t, you may still opt to register if you think it is beneficial.
Check out Sterlinx Global for more professional advice on Sole Traders VAT.