Congratulations, you are now the owner of a dental practice! Whether you’ve set up a new squat practice or you’ve bought an established practice, there will be exciting times ahead and I bet you’re raring to go.

Whatever your plans are for the practice, there is one thing for certain – you will need staff. A dentist is nothing without a dental nurse by their side. Plus, you’ll need a friendly receptionist to greet patients and help deal with the record keeping. And, if you want to grow the practice and sell high-end treatments, a personable and knowledgeable treatment coordinator will be essential.

It would be amazing if all your staff signed up to work for you out of the goodness of their hearts and expected nothing in return but unfortunately, that’s not how the world works. And, because HMRC like to have their slice of the pie, it’s not as simple as bunging them a few quid at the end of each day. This is where payroll comes into play.

It’s likely that you’ve come from a self-employed associate position, whereby you took home a percentage of your takings and paid tax to HMRC every January / June, so your experience of payroll and statutory deductions is likely to be minimal. Fundamentally, HMRC would like their slice more regularly from employees so, as an employer, you are required to make deductions for tax and national insurance (among other things) from an employee’s wage and pay it over to the relevant agencies on a monthly basis. For example:

• If an employee is earning a gross salary £2,080 per month (40 hours per week at £12 per hour)
• You will be required to deduct PAYE tax of £206
• Make a deduction for national insurance of £124
• Make a deduction for a student loan repayment of £35
• Make a deduction for employee pension contributions of £62
• Leaving £1,653 due to the employee

But that’s not the end of the story. Employers are also required to pay national insurance and make their own contributions to the employee’s pension pots. Continuing with the same example:

• Based on the same employee earning £2,080 per month
• There will be employer’s national insurance due of £182
• As well as an employer’s pension contribution due of £47
• This means that the actual cost to the practice would be £2,309 (£2,080 + £182 + £47).

To summarise, £1,653 would be paid to the employee, £547 would be paid over to HMRC (for PAYE, national insurance, student loan repayment) and £109 would be paid to your workplace pension provider.

As you can see there are a lot of calculations involved in payroll. Ensuring the correct deductions are taken from every one of your employee’s pay each month will be key to keeping a happy workforce. There are software packages that will help with these calculations, but payroll is full of other intricacies such as auto-enrolment pension rules, statutory pay rules and national minimum wage rules to name but a few. Payroll is something you can ill afford to get wrong as it can have disastrous effects on your practice because, let’s face it, good staff are hard to find.

If you’d like further information regarding our payroll services, please get in touch.