In a complex financial landscape it can be hard to know what to do with your money, capital, and assets. ...
Perfecting Your Payroll
16 May 2023
MORE THAN THE ‘PRESSING OF A BUTTON’
Processing payroll may look like a straightforward checklist on the surface but in reality, it’s hugely complex and a potentially risky operation.
A lot of work’s involved in making sure these processes are actioned accurately, at the right time, and communicated to the right people.
COMMON PAYROLL PROBLEMS
Just imagine the consequences of issues with pay.
If it’s incorrectly calculated or doesn’t land on time, there’s admin burden to rectify and unhappy employees to deal with. They’ve got mortgages and bills to pay – and you’ll be to blame.
Not only that, HMRC dish out hefty penalties for late submissions and inaccuracies, so as an employer, there’s a lot of responsibility on your shoulders to get it right.
Common payroll problems include:
1. Sending out incorrect or late payslips – this is technically illegal and you could receive a fine from HMRC.
2. Getting tax calculations wrong – this often happens when the wrong tax code’s used or a mistake’s made when calculating taxes.
3. Failing to pay HMRC on time – if you don’t pay on time, you’ll be charged interest and could be liable for penalties.
4. Not paying National Insurance Contributions (NIC) – again, if you don’t pay your employer NIC, you could face fines from HMRC.
5. Missing pension payments – missing or late pension payments can cause undue stress for employees.
6. Not completing the Declaration of Compliance – expect hefty fines for not completing a Declaration of Compliance with The Pensions Regulator (this declaration shows you’re meeting your automatic enrolment duties as an employer).
7. Underpaying employees, or not paying them at all – it’s a serious issue that can lead to severe financial hardship for your employees.
8. Making incorrect deductions – as above.
9. Not paying unauthorised overtime – an employee may work extra hours without prior approval, so it’s important your employees are aware they need approval for working overtime, otherwise you could owe them a lot of money in back pay.
10. Not reimbursing expenses – employees who incur expenses on behalf of your business should be reimbursed in a timely manner.
11. Losing track of payroll records – good payroll housekeeping’s crucial to ensure records are accurate and up-to-date, if they’re not, you could face more fines.
Even with long time trusted employees, there’s always an element of risk around fraud. There could also be risk associated with how safe and secure your payroll data is – a data breach can have severe consequences both financially and reputationally.
This is something we take seriously at Fortus. That’s why we’ve invested in state-of-the-art, digital cloud-based systems for safely storing and protecting data in line with legislation.
KEEPING ON TOP OF CHANGING LEGISLATION
With constant changes in legislation to be aware of, it can be challenging for some SME businesses to stay on top of everything whilst providing consistent and compliant payroll services. Many UK businesses aren’t aware of the payroll legislative changes that are due quarterly following government budget announcements and the tasks they involve.
For example, there could be movement in the National Minimum Wage (NMW) and the National Living Wage (NLW) rates, tax rate thresholds, Statutory Sick Pay (SSP), parental payments, the dividend allowance, auto-enrolment thresholds, and the state pension age. All of these updates impact your payroll processing and one simple slip-up could be damaging.
SAVE MONEY, OUTSOURCE PAYROLL
It’s proven. Businesses save money by outsourcing their payroll function.
Bigger businesses can afford to maintain whole payroll departments, but from SME’s, an in-house payroll department can often be difficult to maintain and can be costly. If you consider the full cost of employing people, maintaining payroll skills, software costs, ongoing training costs, documentation, payslips etc. it often doesn’t make sense for an SME to build this function in-house.
Just think about all of the payroll-related activities in your business that need to be considered and actioned:
- Employment costs
- Recruitment costs
- Time spent calculating payroll
- Double-triple checking payroll
- Producing and distributing payslips
- Training and support
- Data maintenance
- Software costs
- Keeping up to date with legislation
- Liaising with HMRC
It’s quite an overwhelming list, right?
There may be an outlay for outsourcing these tasks to a specialist and experienced team, but the benefits will pay-off in the long run. Use your valuable time on taking your business to the next level, not worrying about payroll, pensions and year end.
As members of The Chartered Institute of Payroll Professionals (CIPP), our specialist Payroll team’s qualified to manage your business’s payroll from start to finish. We’re focused on giving you the service you want, not the service we think you want. We’re flexible and efficient, but importantly, personal – we’re not a faceless company, so you’ll always know who you’re talking to.
Not only do we support businesses that are looking for a simpler, more efficient way of managing their payroll, our team provide everything you need personnel-wise, including pension calculations and deductions, flexible payment dates, RTI submissions, P45s, P46s, and statutory communication, together with a reporting pack to ensure you have all the relevant financial information for your business.
In summary, outsourcing your payroll provision is a positive investment. As a business owner, you’ll gain back time to focus on growing your business versus time spend on laborious admin exercises and processes.
What does the September 2020 Winter Economy Update mean for business owners? Will it help the Economy get back on track?