In the intricate tapestry of running a successful business, few threads are as crucial as ensuring your workforce gets paid accurately and on time. Whether you’re overseeing payroll in-house with a dedicated finance team or harnessing the power of accounting software to streamline operations, errors can still creep in. The good news is that these slip-ups can often be resolved with good practice. We’re Finesse Resources. In this article, we’ll delve into the most common payroll mistakes that we come across and give you advice on how to sidestep them.
Say Goodbye to Paper Payslips
Clinging to archaic paper payslips is a practice that’s fast losing its footing. These slips are not only more expensive, but they’re also detrimental to the environment and hardly convenient for both you and your workforce. The remedy? Upgrade to digital payslips. Available through most modern payroll software, your employees will receive instant access to their payment history via a secure online portal. They can also effortlessly retrieve crucial documents such as p60s and receive prompt text alerts whenever new payslips and documents become accessible. Visit the Finesse Resources Digital Payslips page for more advice on how to make the switch.
Avoiding Employee Information Errors
Among the most common pitfalls in any payroll cycle are inaccuracies in employee information such as tax codes. These simple inaccuracies can lead to either excessive or insufficient tax deductions. Misclassifying employee statuses, like confusing a contractor with a full-time employee, is another common mishap. We strongly advise regular internal audits to ensure your records are squeaky clean by the time they go to HMRC. Many businesses use an external payroll partner, such as Finesse Resources, to handle their payroll auditing.
Adhering to HMRC Deadlines
Missing a deadline or submitting inaccurate submissions can disrupt your payroll operations. HMRC, armed with the authority to dish out financial penalties for incomplete or incorrect submissions, may do just that until your submission aligns with regulations. Set reminders well in advance of important deadlines so you have time to make sure you’re on track. If you find that payroll is taking up too much of your time as a business leader, consider outsourcing some or all of your payroll responsibilities to a payroll provider.
Doubling up on Data Entry
There’s an array of accounting and payroll software available to businesses of any size these days, making PAYE management significantly more manageable. However, it’s important to acknowledge that the efficacy of such software hinges upon the accuracy of the data it’s fed. Inaccuracies can often occur from formatting glitches in Excel spreadsheets to gaps in information. Our top tip is to perform a meticulous review of the data before its integration into your software. Or better still, ask a colleague to review it with fresh eyes.
Being Ready for Regulatory Scrutiny
In your capacity as an employer, the onus rests on you to collect your employees’ PAYE and deliver it accurately to HMRC. Periodically, the tax authority may launch an audit to verify that the correct tax amounts are being paid by your workforce. Such audits can throw your routine into disarray if you’re caught off guard. We use the term “Be ready so you don’t have to get ready” in our approach to HMRC auditing preparation. The best way to do that is by conducting smaller, internal audits regularly and keeping all filing systems, be they digital or paper-bound, in good order.
Ensuring Statutory Compliance
Labour laws and tax regulations are subject to change, and failing to keep up with these updates can result in payroll mistakes. This includes updates to tax rates, minimum wage adjustments, new benefits or deductions and more. Stay across HMRC’s online resources to ensure your payroll practices remain compliant with the latest regulations. Or if you don’t have time, work with a payroll specialist like Finesse Resources who will do it for you.
Communicating Changes
Failing to communicate changes in payroll processes, tax regulations or company policies to your employees can result in confusion and frustration. Transparent communication is vital, whether it’s about changes in payment schedules, pension scheme providers or alterations to tax-related information. When you’re clear and consistent, your employees will know that you are taking care of their finances properly. This helps maintain trust and ensures that employees are well-informed.
Lack of Training for Payroll Staff
If you manage payroll in-house, not providing them with adequate training on new software, procedures, and regulatory changes can lead to errors. Invest in continuous training to keep your payroll team up-to-date and well-equipped to handle any challenges that arise.
For more support on UK payroll matters, visit www.finesseresources.co.uk and get in touch with one of our CIPP-accredited experts.
