Running a business can be a challenging process, with so many moving parts to keep track of. This can be particularly true for small business owners, who tend to have fewer resources and sometimes less experience. Often it’s the financial aspects of business ownership which can be the most problematic- one such aspect being payroll. Every employer needs to grapple with payroll, even if they only employ a single worker. Therefore, understanding payroll, compliance and how to avoid costly mistakes, can be paramount.
Record Keeping
One of the most important aspects of good payroll operation is record keeping. Collecting employee information is a key responsibility of the employer and any changes must be reflected as soon as possible. This means changes in salary, a promotion or changes in circumstance, for example maternity leave. This information is vital to payroll as it dictates how much tax is paid. Employers who fail to keep up to date records could potentially alienate staff by disrupting their salary. Even worse, poor record keeping could cause problems with HMRC, including potential investigation.
In order to combat this, try to create a system in which changes to employee information are updated immediately. You could even implement a self-service approach in which the workers themselves update their own details in real time.
Coach Employees
Although the lion’s share of responsibility is placed on the business owner, employees are also tasked with specific responsibilities. For example, employees need to document their expenses in order for businesses to make the correct claims. Another task that is often placed on workers is the documentation of overtime, which again has an effect on payroll. It’s easy for workers to forget about these responsibilities and therefore businesses need to create clear policies for workers to follow. Outline what is expected of your workers and publish it in a simple, concise guide, which can be put online, offered as a physical document, or both, for easy access.
Pensions
Since their introduction in 2012, workplace pensions have become a legal requirement facing every business who employs workers. Upon hiring an employee, companies must set up a workplace pension. As well as setting up the scheme, employers are also expected to make contributions to the pension. Of course, every aspect of workplace pensions is going to affect payroll and therefore needs to be understood in order for business owners to remain compliant. This means being aware of who needs to be placed in a workplace pension and how automatic enrolment works. There are countless resources online, with further information on workplace pensions and how they affect employers.
Payroll Calendar
A relatively simple but often extremely effective method of improving payroll is by introducing a payroll calendar. As the name suggests, the payroll calendar creates a regular schedule for delivering payments to employees. This signposts key dates for both business owners and employees and creates a timeline to follow. It may seem simplistic but calendars can transform the payroll system, boost morale and help to avoid costly mistakes. There are many templates online to choose from but you will have to alter the calendar to fit your specific requirements.
New Legislation
As we have discovered in recent years, governments can change relatively quickly and with that often comes new legislation. Therefore, it’s important to stay up to date on the current rules and how they effect your business. Ignorance of the law is not a valid excuse when investigated by HMRC and could lead to penalties. You could delegate this task to one of your employees, ensuring that someone within the company is continually checking up on any changes to rules and regulations.
Small business owners face many challenges, therefore any chance to avoid potential pitfalls can make all the difference. With some small changes and a dedicated approach to compliance, employers can ensure that their payroll is a success.
Those who are worried about their payroll or any potential discrepancies can work with the experts from Taxation Investigation, who have years of experience in providing comprehensive financial solutions.
