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Managing company directors in QuickBooks Online Core Payroll

by Intuit•15• Updated 1 month ago

Note: If you are managing company directors in QuickBooks Online Standard Payroll see this article.

Understand that company directors are treated as employees and are subject to National Insurance Contributions (NIC). Basically, NIC is paid on their salary and bonuses that go beyond a specific threshold. The threshold is based on their annual earnings, not their monthly or weekly pay.

To add a company director, follow these steps:

  1. Go to Payroll, then Employees. 
  2. Follow the steps of add a new employee, or select an existing employee. 
  3. Go to the employee’s Tax information. 
  4. Select either Edit or Start.
    1. If you select Start, enter the relevant information. 
  5. Tick the Company director checkbox. 
  6. Select their appointment date. 
  7. Choose the director calculation method.
    • Annual method - use for employees paid irregularly, like those paid mostly in bonuses. Once selected, you can’t change this for the rest of the tax year after the direct has been paid. 
    • Alternative method - use for employees who are paid regularly with a salary. 
  8. Select Save.

Remove a company director

  1. Prepare a P45 and provide a copy to your employee. 
  2. Once you have made the final payment, delete the director’s NIC calculation method entry in the Full Payment Summary (FPS) and communicate this to HMRC. 
  3. Deduct any NI payments that are outstanding from the director’s last payment.

Note: If the director continues employment as a regular employee, they’ll continue to pay National Insurance as a director until the end of the current tax year, which ends on April 6. 

  1. Go to the Employees or Payroll menu.
  2. Select the employee.
  3. Go to the employee’s Tax information. 
  4. Uncheck the Company director checkbox. 
  5. Select Save.

More help

Looking for guidance on navigating QuickBooks Online Core Payroll? Check out this resource page with how-to guides to help you.

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