Companies can keep up to date with payroll legislation in various ways such as by visiting the HMRC web site, calling the HMRC helpline, reviewing payroll blogs and newswires or receiving news through their CIPP membership. For many though, using an outsourced payroll service is a much more cost effective solution, providing peace of mind that the company payroll is taken care of, without the constant need to keep abreast of this critical business information.
Contact us now to arrange a review of your payroll.
Avoid Payroll Problems
The most important business function for companies of all sizes is the running of an accurate and timely payroll. Some of the consequences of not doing this include overpaying or underpaying of tax, paying employees late or incorrectly, receiving penalties and interest charges from HMRC or making incorrect staff pension contributions. This can have an extremely detrimental effect to the health and stability of an organisation.
Overpaying or underpaying tax
If a company is not calculating their payroll correctly then they could be underpaying or overpaying tax. Overpaying of tax is the less serious of these; whilst causing extra administration to HMRC and a reduction of cash flow in the business, ultimately the overpaid tax will be refunded. Underpayment is more of a problem because the business may find themselves in a position where they have to pay a large lump of cash out when they do not expect to, which can hurt the cash flow of the business. What’s more, the HMRC charge interest on owed money and over time this can build up. For example it only takes incorrect payments of £10 a month for 100 employees over 5 years and a business would owe HMRC £60,000 plus interest!
Payroll outsourcing will ensure that the correct amount of tax is paid to maintain healthy cash flow and avoid interest charges. Contact us now for more information on our payroll outsourcing services.
Paying employees late
Late payment of wages can lead to personal money problems for employees, such as cheques bouncing, mortgage payments being declined and unexpected bank charges, which will all cause high levels of stress. Employees will not stay long in a company that jeopardises the security of their family, therefore this situation must be avoided at all costs.
Incorrect payment of employees
Payroll errors, both the underpaying and overpaying of staff are a problem for a number of reasons. If undetected, they can result in the employer or employee losing money and whilst the majority of personnel will notify their manager of an underpayment, figures published at onrec.com show that only a small percentage of staff will report overpayments. Therefore the majority of undetected errors will be ones where the employer loses money.
By law, an employer can usually reclaim overpayments made to employees. An exception to this is where an employee spends the overpayment, having genuinely not noticed the mistake. In this case, where an employee has spent the money on something they would not normally have bought and this changes their position, then a court may rule that they do not have to repay the money.
In addition payroll processing takes time and when errors are made, staff will spend extra time dealing with queries and correcting inaccuracies, all costing a business money.
Using FMP’s payroll outsourcing service takes away the worry of paying employees. Our service will make sure that staff are paid accurately on time, every time.
Handling payroll is a time consuming task and late filing of forms or errors and omissions can all lead to expensive fines. New legislation can change what is required by a company, and it doesn’t take long for penalties to add up, wasting company resources and leading to extra administration and stress.
Our UK payroll service is cost effective for businesses of all sizes. We will both save you money on your payroll processing costs and ensure you avoid paying penalties.
Pensions are subject to frequent changes in legislation, which if not fully understood and applied can lead to incorrect payments to employee’s pension funds. Similar to the above, this can lead to unexpected monies being required to correct payment amounts and cause stress to those affected.
FMP’s payroll outsourcing service will make accurate pension contributions each month to avoid these potential problems.