Learn How to Avoid The Top 5 Payroll Mistakes
Mistakes in payroll can be embarrassing and costly for small companies – as well as demoralising for their workforce. Small firms can ill afford to pay penalties for sloppy procedures. Many employees do not immediately check their payslips so it is important that errors are prevented before it is too late. Nobody wants to confront an angry or frustrated employee or a tax bill at the end of the year. If your company has not outsourced payroll to an agency they should look seriously at improving the procedure. With a little foresight it should be possible to avoid making some of the most common errors. Here are 5 factors to consider and at all times avoid:
1) Missing Deadlines
Deadlines for PAYE calculations are set by HMRC. You should have software to remind you when these need to be submitted, or at least mark the deadlines on a calendar. Keep schedules up to date and easily accessible. Penalties can be incurred for late payment. Prompt submission is essential for the end of the tax year and correcting errors can cause headaches for the financial controller.
2) Payroll Delays and Inconsistencies
Nobody likes getting paid late especially if their mortgage is due to be paid the following day. The system needs to be easily calculated to avoid last-minute delays to staff payroll. Overtime must be tracked from all departments, and claims submitted well ahead of the close of PAYE to ensure that workers receive these benefits. Ensure that the time logged by the employee matches the claim submitted by their manager. Payroll should be submitted at the same time every week or month to avoid mishaps.
3) Not Keeping Records
Records for Payroll need to be archived for three years. Your filing system should keep these secure but easily accessible. Again, penalties can be incurred for failing to keep records. Workers can fall into many different categories – salaried, hourly, temporary, contracted, full-time, part-time. Changes to these status categories need to be logged, as well as any deductions at source that need to be levied before salary can be calculated.
4) Back up Files
An effective online Payroll system should allow secure archival, in case of deletion of active files. If you are still not using adequate software you run the risk of losing vital information. Losing data will be a nightmare, and do not place ultimate responsibility in the hands of just one person – if they are taken ill there should be somebody else capable of paying the staff.
5) Train your staff
Whoever is given the Payroll must be proficient in its usage. Training is essential to avoiding mistakes. Inexperienced staff may put employees in the wrong classification, or assign an incorrect tax code, and the resulting slip will be incorrect. Names, addresses, and social security numbers must be kept up to date and changes must be cross-referenced. Employee deductions such as child support and student loans are the responsibility of the company.
If these payroll mistakes have made you wonder, here is a great graphic to help you visualise this in the office workplace.
About the Author
Geoffrey, is a freelance writer specialising in Payroll Software services. In his spare time he enjoys mountain climbing, badminton and having friends round for dinner parties.