5 Mistakes You're Making With Your Payroll (and How to Avoid Them)
Making sure your employees get paid on time, every time involves managing your accounting processes with precision. Whether you’re managing payroll in-house with a finance team or using accounting software to manage your small business, mistakes are common. Thankfully, they can often be rectified with one catch-all solution. Here are the most common mistakes to avoid and how to avoid them.
1. Incorrect data entry
There’s a whole host of accounting and payroll software available to businesses today that makes managing PAYE much easier. But your software is only as accurate as the data you feed it, meaning it’s not a foolproof solution to your payroll needs. From formatting errors in your spreadsheets to missing data, it’s important to check your data with a fine toothcomb before you store it in your software.
2. Not being audit-ready
As an employer, you’re responsible for collecting your employee’s tax and NI and providing it to HMRC. Occasionally HMRC will investigate your records in the form of an audit to ensure that your employees are paying the correct amount of tax. If you’re not prepared, it can completely derail your to-do list. Be ready so you don’t have to get ready – that’s the mantra to live by when it comes to auditing.
3. Missing HMRC deadlines
Missing a tax deadline or not submitting Real time information (RTI) accurately can wreak havoc with your payroll processes. Financial penalties can be issued by HMRC, which can increase with interest until a correction submission is made. Keeping deadlines at the front and centre of your mind isn’t always easy, especially if you’re a small business that doesn’t have an in-house payroll team, but it pays to be organised when it comes to payroll.
4. Employee information mistakes
Incorrect tax codes are one of the most common mistakes in every payroll cycle, regardless of the size of business. This means your employee will be paying too much or too little tax, which is bad news for you and your business. Add to that the misclassification of employee statuses, such as getting a contractor mistaken for a full-time employee, and you’ve got a payroll-induced headache on your hands. Performing regular internal audits and double checking information is key to making sure your records are up to date and accurate.
5. Sticking with paper payslips
There’s virtually no argument for sticking with traditional paper payslips. They’re more expensive, less environmentally friendly and much less convenient for you and your employees. By switching to digital payslips your employees will have instant access to their payment records on a secure online portal. They can also access and store other important documents like p60s, employment contracts and receive email alerts when new documents are available to view.
How to avoid payroll mistakes
Outsourcing your payroll is the most cost-effective way of preventing mistakes and ensuring efficient delivery of your financial obligations. Trusted with over 250,000 payments per month, Finesse Resources offer a flexible payroll solution that’s tailored to your needs and the size of your business. No business is too big or too small. Decades of shared experience and a genuine passion for payroll mean we're the go-to company for all your payroll needs.
We make sure your employees get paid on time, every time. Take back your time and leave the payroll to us, get in touch.