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Top 10 payroll issues

//Top 10 payroll issues

Top 10 payroll issues

Payroll can be complicated, and there are many common issues businesses can face. Here are our top ten.

Payroll isn’t an easy task at the best of times. If you have an HR department it will be easier for you, but many small businesses can’t afford this and it is left to the owner to conduct everything. If you’re not trained in it, it can be very easy to commit a mistake.

To help you spot errors before they occur, we’ve compiled the ten payroll issues that we think are most likely to come up. Of course, if you want to avoid them, you can always invest in outsourcing your payroll; book a free consultation with us to find out more.

1.  Late payment

Perhaps the most common issue is paying your employees late. As long as you pay them as soon as the mistake is noticed, you should be able to avoid too much damage. However, this will impact their morale and make it much harder for you to retain the top talent in your industry, as well as negatively impacting productivity while your employees wait for their wages.

2.  Incorrect hours

Depending on your time-tracking system, your employees might be able to sign in and out inaccurately to claim a bit of extra money. This could be malicious or completely innocent, but either way, it will cost your business.

3.  Brexit

For the last few years, Brexit has been coming, but nobody really knows what it will bring. However, in all the rows about trade deals and freedom of movement, it would be easy to miss a change to how payroll works. You should keep an eye out for any announcements, especially if you have staff from outside the UK.

4.  IR35

IR35 legislation is familiar to many freelancers, and if you employ any, you need to familiarise yourself with it. Essentially, if you take on a freelancer, but you treat them as you would any other employee, they might fall under IR35, and you could end up having to pay for employee benefits like sick and holiday pay.

5.  Backup failure

If you’ve got a few years of payroll data saved onto a hard drive and it gets erased, what will you do? This is a common issue that can be easily solved. Make sure all your payroll data is backed up on multiple devices, and ideally on the cloud if possible for maximum safety.

6.  Pension auto-enrolment issues

Part of your responsibility as an employer is to contribute to your staff’s pensions, through auto-enrolment schemes that automatically take money from their wages each month. In theory, this should be set up to work automatically, but you need to make sure you’re familiar with the system to avoid being caught out and denying your employees what they’re entitled to.

7.  Misclassifying employees

At any one point, you might have part-time and full-time employees, freelancers, interns, apprentices, and staff on parental leave. Each of these has its own tax classification, and getting it wrong can make things quickly complicated.

8.  Tracking overtime

Because overtime is an addition on top of your usual payroll, it can often be a lot of extra work. You need to make sure it’s all recorded correctly, that it’s paid at the rate you agreed and that it’s all taxed in the right way. Getting this right means being especially careful, so you don’t miss a crucial step.

9.  Forgetting bank holidays

It might seem like an obvious thing to you, but many businesses have seen errors occur because they forgot their company’s payday landed on a bank holiday, causing employees to be paid late. Make sure you stay on top of this to avoid any issues.

10. Changes in regulation

This one is, unfortunately, vague because there’s no way of knowing what changes in payroll legislation will occur in the future. However, you need to keep your ear to the ground when it comes to this, as any new laws that affect your company’s pay will likely cause issues if they aren’t implemented correctly.

By | 2019-05-22T09:50:03+00:00 May 22nd, 2019|Primary Featured Post|0 Comments

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