Every business faces a multitude of challenges each of which threaten their survival from the get-go. Payroll being one that is well-known for keeping many an entrepreneur awake at night.
Paying staff correctly is one of the most important legal responsibilities of any new business, ensuring employees are paid correctly and on time. With the payroll process being a complicated one, there are tax considerations, new hire procedures and legal requirements to adhere to. It is a number one concern for many small business owners with as many as one in three being penalised for payroll mistakes.
As a small business it’s crucial to know that payroll errors are currently costing UK firms over £700 million each year in overpayments to HMRC. So, what can you do to manage your payroll better? Here are some expert tips James Alesbury, Director and specialist in Payroll at HWB Chartered Accountants has put together to help.
- Understand the scope of your payroll requirements
Firstly, you need to establish your exact payroll requirements. Do you have a large number of employees? Are they paid weekly or monthly? Do you need international payroll? Which employees qualify for auto enrolment?
By having a clear understanding of which areas need consideration within your payroll function you can make important decisions on running your payroll and what to keep an eye on moving forward.
- Know your deadlines
Knowing what you need to action well in advance will ensure you have time to deal with any issues that may arise. Work with a system that alerts you of important dates such as submitting P11Ds in addition to your monthly payment deadlines.
- Limit mistakes with payroll software
By implementing payroll software which can report PAYE information in real time to HMRC you will save hours of administration.
One of the main benefits of payroll software is the automation. On average a small business can spend up to 120 hours a year on processing payroll manually. Studies have shown that payroll processing software can cut processing time down dramatically with automated methods.
Not only that, but payroll software can also help limit payroll mistakes which are very common. Taking care of National Insurance and tax calculations, generating payslips and keeping up with changes in legislation are all key features that will make the process smoother.
- Check your attention to detail from the beginning
Checking through employee details as they are entered at the beginning can save more time in the long run. Key information such as start dates, maternity/paternity start dates, addresses, dates of birth, etc could be small mistakes that lead to bigger problems over time.
- Keep up with changes in legislation
Payroll legislation is regularly changing and its important to keep up with the amendments on how you treat benefits, taxes, minimum wages, and sick pay, etc. Such legislative changes affect how you conduct your payroll but also if you don’t keep up with them can lead to significant penalties.
- If you’re still struggling – outsource your payroll
As discussed above, payroll can be a huge headache for any business, let alone a start-up. If resource is limited or mistakes are being made it may be time to outsource your payroll to experts in the field. It may be time to adjust your payroll setups and to run a health check on your internal processes to ensure you avoid fines or penalties in the longer term. Outsourcing to experts who know the requirements, processes and legalities inside out mean they can act as an extension of your team and ensure costly errors are avoided.