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How to avoid the 7 Payroll Pitfalls?

Over the years, MP Payroll Solutions have provided outsourced payroll services to hundreds of companies within the UK.  We have a lot of experience in determining payroll errors in small businesses and how to resolve them. The aim of this post is to help businesses avoid the 7 Payroll Pitfalls. From our point of view, it seems like SME businesses make the following critical payroll mistakes:

  1. Correct payroll personnel

    The lack of technical payroll knowledge is a common concern. For instance, payroll personnel that are unfamiliar with the in-house payroll system will result in payroll mistakes.  Therefore, adequate training or outsourcing your payroll will eliminate any critical payroll mistake.

  2. Becoming compliant

    HMRC requires employers to submit period payroll files, specifically RTI, and account for tax as well as national insurance at source. All too often this doesn’t happen and as a result, employers end up in arrears with statutory payments. Employers can also download tax code notices directly from HMRC and this too gets missed. As a result, you may get disgruntled employees, as they end up underpaying tax.

  3. Staying updated with UK legislation

    There is always HMRC legislation to consider and ensuring that any changes are implemented in a timely manner. Failure to implement can have severe ramifications. In addition, with the arrival of GDPR, it’s important that employers remain compliant with the latest GDPR requirements. As a result of GDPR non-compliance, legal action may be taken.

  4. Setting up an IT infrastructure

    It’s common for small companies to not back up their payroll IT systems because it’s expensive. Therefore, any payroll system issues will be extremely difficult to resolve. Backups of any payroll system should be both backed up onsite as well as offsite.

  5. Contingency plan

    What are the arrangements for continuing business in the event of a fire or other disaster? What happens if systems go down or payroll personnel suddenly leave? A contingency plan will help prevent any of these scenarios from becoming reality.

  6. Underestimating the cost

    Small business underestimate the total start-up cost to set up, as well as run, a payroll in-house. The technical infrastructure is expensive and training staff can also be costly. Read: How much does outsourced payroll cost? In addition, making these critical payroll mistakes will result in costly fines that can cripple a small business.

  7. Leadership

    Often, payroll is a standalone function and they find themselves pulled between finance and HR. This makes life difficult for the payroll function and as a result, leads to staff being confused and even demoralised. Be clear where payroll sits within your organisation and who, if anyone, they report to.

So, what’s the one solution for all the above?

You won’t have to avoid the 7 Payroll Pitfalls if you Outsource your payroll to MP Payroll Solution! All of the above problems disappear because MP Payroll Solutions is CIPP (PAS) Accredited. Therefore, we have all the above areas covered with full procedures in place for dealing with all of the issues a payroll office can face.

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