The 7 Deadly Payroll Pitfalls and How to Absolve Yourself from Them
January 12, 2021
Payroll may not be as simple to run as baking a cake but it would be hardly right to call it an impossible achievement. After all, there are still many business owners who prefer processing their firm’s payroll itself. That being said, one must remember that time, dedicated effort and accuracy are factors that one needs to consider. Doshi Outsourcing being the ideal payroll outsourcing partner for scores of firms has come up with a list of seven common payroll pitfalls that most employers or business owners face and would do well to be forewarned of. Based upon our expert pool of consultants and accountants we’d featured the below so that small businesses can all the easier irradicate any payroll processing concerns in these difficult times. So, without further ado, here is the list of the seven deadliest payroll pitfalls with tips as to how you can save yourself from them:
1. Are you up-to-date?
The legislation changes every year and the past year 2020 saw the most unusual number of changes. That is why staying abreast of the changes that the HMRC declares is crucial so that one avoids becoming non-compliant due to chiefly ignorance. Of course, if you have an accountant that would be a game-changer as it would be ultimately your accountant’s responsibility to keep you informed. Apart from the HMRC, there is also the General Data Protection Regulation (GDPR) to consider as well. If one does not stay in sync and updated it is possible to be penalized for what would be considered as non-compliance.
2. Compliance is more than merely being up-to-date
Payroll since RTI has become even more complex and challenging as one needs to focus not only on getting things right but also timely filed. And this timely filing, unfortunately, is not merely once a year but on every pay run. So, if you are a weekly employer it means roughly four Real Time Information (RTI) submissions a month. Added to this are pension administrative duties, ensuring tax codes are applied correctly, paying the PAYE and NIC liability on time to avoid penalties on the same. Also, re-enrolment needs to take place towards Work Place Pensions every three years meaning declaration of compliance filing duties again! Thus, compliance is a never-ending story that you need to be on top of as otherwise, you may have to pay heavy fines. For instance, not filing your RTI on time can cost you £100. Many employers have missed out on furlough due to delays in filing their RTI which went through past the HMRC’s deadline.
3. Multitasking is not effective for payroll
When it comes to in-house payroll most employers tend to shirk away from the idea of full-time payroll staff as payroll (unless weekly) is a task that can occupy a maximum of two full-time days and that too when complex and having sufficient staff. That is why for most small businesses you have a manager who doubles between both functions. However, this does tend to get difficult during peak periods or when there are HR or employment-related disputes. One win-win solution here is to outsource your payroll on an hourly basis by which means you can have your cake and eat it too. Therefore, instead of putting pressure on your existing staff, you can have an expert looking in on things minus the overhead costs.
4. Software and overhead costs
Having the software is just another matter you’d have to factor in. And once you have the software taking the necessary backups, saving the data on the right drives (with GDPR in mind), and updating the same, all are another job entirely. Thus, overhead costs mount up at an alarming rate and the time taken as well is another addition to the above.
5. Plan B – Take the present pandemic for instance
What does one do in an emergency? Having a plan B ready in case your dedicated payroll staff are on leave or you cannot work from your premises too needs to be factored in. With an accountant, you can reap the benefits of using cloud-based applications without having to invest time doing the calculations.
6. Not just salary but HR and more
It would be quite belittling to associate the payroll process with just computations of salary. With employment contracts, wage and holiday pay-related queries, and the like – payroll does not entirely confine itself to an end of the month process. Also, if there is an investigation from the HMRC like a Coronavirus Compliance check or (Lord forbid!) a sudden tribunal case; things do get sticky quickly.
7. Hidden costs
By delegating your payroll work to a professional you need not worry about taking the time out to do it yourself or the accuracy or expertise of those involved. This in the long term saves you from other costs like penalties, buying software licenses, or add-ons like the pension’s module and the like. Effectively your part of the payroll role ends with you just needing to provide your accountant with the necessary data.
Doshi Outsourcing can be your one-stop solution to all your accounting needs as we provide payroll services VAT, Taxation, bookkeeping, management accounts, and legal admin services. Having an accountant may sound expensive but, in the long run, you are saving yourself from costly errors financially plus, having the peace of mind that everything is being submitted correctly and on time is something irreplaceable.