1st August 2019
In any company paying your staff correctly and on time is very important and those in charge of this process have a tremendous responsibility on their hands. Particularly for smaller businesses, payroll can be tricky, with limited resources and expertise. Making mistakes in your payroll can lead to fines and bad press for a company, so you must be aware of what can go wrong and how to avoid it.
One of the most common payroll mistakes is inaccurate data. It is usually down to human error or not updating information in a timely or effective way. The HMRC requires all UK businesses to maintain accurate and detailed financial records. Poor record-keeping and data entry can be very costly for businesses in terms of productivity and growth and can result in hefty fines.
Inexperienced Payroll Staff
Often for smaller businesses not having experienced payroll staff or not providing adequate training is common. Managing payroll in-house requires knowledge and qualifications to ensure payroll is processed accurately and on time. Not having experienced staff can result in the inability to comply with current legislation and could result in mistakes in your payroll.
Not being GDPR compliant
GDPR introduced several new requirements that affect payroll, including an individual’s rights over their personal data and the way we provide payslips to our employees. GDPR also affects how you store your payroll data and how you provide data to your employees. Staying GDPR compliant is extremely important as failing to do so can result in hefty fines.
One of the main responsibilities of a payroll department is to meet a number of important dates and deadlines on the tax calendar. Often, we see that smaller companies don’t have a dedicated payroll team who have the time to keep up with all of these. It is important that you stay on top of all the dates and keep looking out for changes or any news ones to be added. Failing to keep to deadlines can also result in fines.
Misclassification of employees
Classifying your employees can be complicated and confusing, especially when the process takes in part-time and full-time members, temporary staff and independent contractors. Tax authorities take employee misclassification very seriously. Getting it right is important as it impacts income and employment tax, as well as shows whether the worker is entitled to benefits or compensation.
Inadequate Backup Systems
Companies that do not have adequate payroll software that has backup systems in place run the risk of losing vital information if an error occurs. The loss of payroll data and history could lead to problems across the business. Typically smaller businesses tend to have only one person looking after their payroll which can be challenging if that person is ever absent when these processes need to be done. Outsourcing your payroll could be a way to tackle this as your payroll will always be taken care of.
It is possible to avoid payroll mistakes and ensure your payroll is accurate and timely. Make sure you choose the right payroll solution for your business. For micro and SME businesses, either a fully outsourced or part managed payroll service could be the ideal solution if you do not have the qualified personal and experience in-house.
The Ultimate Guide To Payroll For Small Businesses
Running your payroll in-house can be complicated. Look at our handy Ultimate Guide To Payroll For Small Businesses to see how to get started and manage your payroll.