I can almost guarantee that there is no such thing as the perfect payroll – apologies for the misleading title. However, there are things you can do to make your weekly, or monthly, payroll process easier to manage.
When payroll goes bad
If your payroll is inaccurate, or poorly managed, the consequences can be far reaching for your business.
You could face hefty penalties, risk reputational and financial harm to your business and seriously damage staff morale.
It’s for these very reasons that many small business owners approach payroll with a sense of dread and fear. Of course, if you have an in-house finance team you may have someone to handle the process for you, but you still need to know whether they are being compliant and accurate.
If it was just a case of processing time sheets and issuing payments it might not be too much of a problem. However, tax rules, changing legislation, salary sacrifice schemes, part-time workers, holiday pay, sick pay, workplace pensions, flexible working, over-time and more recently furlough (list is not exhaustive), all bring their own complications.
The good news is there are ways to make managing your payroll efficiently and accurately a less daunting process.
Maintain meticulous records
It might sound obvious, but ensuring your company maintains meticulous employee records is step one in a painless payroll process. Throughout their employment with you, it is your duty to keep accurate records of salaries, pay rises, promotions, periods of leave and changes to their personal details.
Make sure you have robust HR procedures in place to manage this and that compliance is checked on a regular basis.
Get your staff to do their bit
Do your staff know the company expectations when it comes to things like expenses, overtime, time recording and leave?
A company handbook is often the perfect place to keep these policies, procedures and practices in one place and available to all. Just don’t forget to update them when necessary and, of course, communicate changes to your staff.
Worried about workplace pensions?
Since 2012, workplace pensions have been a legal requirement for any business with at least one employee. If you don’t ye understand what is meant by auto-enrolment, what your legal obligations are with regards to contributing to employee pensions, or what the opt-out rules are, it’s time to do some homework.
A good place to start is the Pensions Regulator. If you outsource your payroll function, your provider should also be able to help you.
Follow the (audit) trail
Every financial transaction within your business should be easily auditable. It will protect you against fraud, improve your financial management and offer vital proof if your are subject to any form of financial investigation.
Making sure that your financial management processes carefully record all activities, and periodically auditing compliance with your processes will help ensure your payroll is accurate each time it is processed.
Keep up to date
There’s a saying that change is the only constant, and this is certainly true for payroll legislation. Whether you choose to subscribe to HMRC updates, take advice from your accountant or participate in any of the plentiful webinars, seminars and conferences, make sure you are proactive in keeping abreast of changing legislation.
Ignorance is not a defence if you end up on the wrong side of the law.
If your business operates in different countries, then you also need to watch out for changes to international legislation
Removing human intervention is often a key step in increasing the accuracy of payroll administration. Time-sheets that integrate with your accounting software remove manual data processing, expenses can be synced into your systems without the need for cumbersome forms with receipts stapled to them, and many systems also allow staff to update their records themselves.
You’ll reduce the administrative burden, increase accuracy and empower your staff to take responsibility for their own record keeping.
You can avoid penalties by ensuring that you meet your statutory deadlines. Implement a process that gives your payroll administrator sufficient time to process and check payroll before submitting returns without hitting year end or quarterly reporting dates.
Choose an alternative solution
If managing your own payroll fills you with dread, distracts you from the important task of running your business, or is giving your sleepless nights, consider choosing an alternative solution.
Accountancy Solutions are payroll experts and can take care of everything on your behalf. Never again do you need to worry about missing a deadline, making a mistake in calculating pay, or (heaven forbid) paying your staff late.
With knowledge and experience of all the major cloud accounting systems, as well as exceptional excel skills, our team can process your payroll quickly and efficiently, freeing your team to focus on activities that contribute to achieving your business objectives.
We can often cut your costs too!