By Niamh Tracey | 6 September, 2022

National Payroll Week: Common Problems and Solutions

Contact us if you feel that we can help your business in processing and managing its payroll function. 

As well as often being the single largest expense for a business, payroll can also be the cause of some of the largest headaches for owner-managed businesses. Here we outline some of the most common issues surrounding payroll processing, highlighting the need to get it right the first time. 

Complexity 

Processing payroll can be a highly complex undertaking requiring acute attention to detail. Your business might have to cope with a mix of hourly-paid, weekly and monthly employees, with some of them on multiple rates depending on their work patterns. Mixed work patterns will affect employee holiday entitlement which often require a high degree of knowledge and skill to calculate correctly. 

You might have a number of deductions to process for individual team members such as student loans, private health insurance, private car parking, County Court judgements or child support payments. Some of these need to be paid over to the relevant organisation and all of them need to be checked and processed for each payroll run. 

You might have staff on sick or maternity/parental leave and you are required to fully understand the current rules and legislation surrounding their entitlements. 

Auto-enrolment pensions have been mandatory for a number of years and as a business owner, you must follow the rules of the scheme and ensure that each employee is assessed for pension purposes and provided with the opportunity to join or leave the scheme within the mandated timeframes. Non-compliance with the Pensions Regulator and HM Revenue & Customs guidelines can result in harsh financial penalties. 

Regulatory and legislative changes happen regularly at the behest of the Government of the time. These can be dramatic and complex. Covid-19 and the JRS scheme are a clear example of sudden and significant changes made to the payroll system, with business owners expected to administer the new rules immediately and accurately. 

Sensitivity 

Your team depend on their pay cheques, more so now than ever before during this cost-of-living crisis. It is therefore critical for their wage packets to be error-free. Nothing will upset your employees more than finding out that they have been underpaid but overpayments can often cause similar stresses as you will have to ask for these to be repaid to the business. 

The timing of the salary payments is highly sensitive too. Staff rely on their pay days and a single day’s delay because of an error can cause significant upset to those people you rely on to run a successful business. Their dissatisfaction can adversely affect team morale and productivity. 

Insufficient or inexperienced staff 

With payroll being a key function within your business, you must ensure that you have adequate staff to manage it and that they are sufficiently well trained to cope with all aspects of it. Appropriate cover must exist for illnesses and holidays as this is one function of the business that cannot skip a deadline. 

Adhering to statutory filing deadlines 

Payroll data must be submitted via HM Revenue & Customs’ RTI electronic reporting system for each payroll run. This must be done on or before pay day. Invalid RTI submissions can cause a multitude of problems for the employer, especially where statutory deductions are made but not reported correctly. 

Businesses can often find it difficult to process payroll data on time and accurately, especially where last minute changes are made or employee circumstances change with very little notice. 

Solutions 

In order to overcome the above payroll problems as an owner-managed business, you might consider the following steps to help you in setting up and supporting a reliable and secure payroll function. 

  • Find the time to understand the basics of payroll yourselves, as business owners. With a solid, fundamental knowledge of HMRC legislation and employee entitlements, you will understand what is required to establish an efficient payroll processing function and the level of experience needed from your team. 
  • Hire sufficiently qualified people. To be able to run an in-house payroll system, your business must employ adequately experienced and trained payroll staff. They need to be up to date with the current legislative framework and have the ability to manage their own professional development to ensure they are on top of any changes. 
  • On-the-job training. Business owners should recognise the need for their payroll staff to stay up to date with ever-changing legislation and should ensure that sufficient time and resources are supplied to enable their continued learning. HM Revenue & Customs releases online training materials and helpful webinars to support you in this process. 
  • Outsource your payroll function. Often, the most sensible and cost-effective solution for SMEs and owner-manged businesses is to outsource their payroll function completely. In choosing to hand over responsibility to a professional payroll processing company, business owners are rewarded with the assurance that their payroll is being completed accurately and on time. Their time can be better utilised to undertake the core tasks required to run their businesses successfully. 

At Saul Fairholm, our payroll department provides businesses with a tailored payroll processing solution. Our expertise and the latest software ensure a reliable, secure and timely payroll processing service. We remove the worry and the risks associated with payroll problems and ensure that we adequately resource and train an in-house payroll function. The aim is to save your business time and money and to support you with whatever payroll problems arise. 

Please do contact us if you feel that we can help your business in processing and managing its payroll function.