Category: Payroll

How To Avoid Payroll Mistakes

Payroll management is a vital and fundamental element of running a business and it is paramount that you avoid making payroll mistakes. It is important that payroll processing is carried out accurately and is compliant. You will want your employees to be paid correctly and on time and you will also want to avoid any fines or legal issues. There are lots of hurdles to jump over including complex legislation, auto-enrolment, rolling deadlines and RTI submissions. With large fines for mistakes, it’s worth getting the process right. Here at team4, bookkeepers with worldwide clients, we often witness payroll errors when we are called in to put things right. Here is our list of the most frequent payroll mistakes and our tips on avoiding them.

Misclassifying workers

This involves misclassifying the status of somebody doing work for you. It is one of the most common payroll mistakes. It often involves not distinguishing between an employee and a self-employed contractor. There are many distinctions you will have to make including new starters, those with a second income and employees with company benefits such as a vehicle or private medical insurance. Contractors and freelancers are not eligible for the same rights as employees such as holiday allowances and pensions. Your workers’ status should be based on HMRC guidelines and employment law. Here at team4, we advise efficient record keeping and keeping up-to-date with the latest legislation.

 

Application of incorrect tax codes

If employees are given the wrong classification, this can lead to over or under taxing them. Tax codes should be reviewed regularly and it is important to do this if an employee’s circumstances change. Tax codes can be checked with HMRC and therefore you are expected to assign the correct tax code to each employee. You can review and download tax codes by signing up for the HMRC PAYE dashboard.

Not implementing an Auto-Enrolment pension scheme

Auto-enrolment in workplace pensions is now a legal requirement. You will need to contribute to your employees’ pensions and of course comply with the regulations and rules. Fines can be imposed if you fail to comply, so make sure you implement a robust pension scheme. There are frequent changes in thresholds and regulations so it is vital to regularly review publications from The Pensions Regulator to avoid payroll mistakes.

Missing deadlines

There are strict deadlines for payroll submissions. This includes Real-Time Information reporting and payment of taxes. To avoid penalties, we recommend careful planning and keeping meticulous and correct records.

Inaccurate record keeping

Records of employees pay must be kept accurately and large fines are applicable for failure to do so. As an employer you must maintain records of hours worked, bonuses, overtime and deductions. According to the government you must collect and keep records of:

 

  • What you pay your employees and the deductions you make
  • Reports made to HMRC
  • Payments made to HMRC
  • Employee leave and sickness absences
  • Tax code notices
  • Taxable expenses or benefits
  • Payment Giving Scheme documents including agency contract and employee authorisation forms

 

How to prevent payroll mistakes

 

  • Keep accurate and up-to-date employee records
  • Schedule payments on time
  • Track employee leave and absences
  • Keep abreast of tax regulations
  • Use reliable and the right payroll software for your business
  • Outsource your payroll

 

How can team4 help you to avoid payroll mistakes?

Without the right tools, resources and knowledge, employee payroll can be a minefield. We hope our latest blog has highlighted the most common payroll errors and will help you to avoid them. Careful planning, accurate record keeping and staying up-to-date with the latest legislation are your three keys to success. However, if you really want to avoid these payroll mistakes, the answer is to outsource your payroll to an experienced and knowledgeable team. For more information on how we can help, please get in touch. We have experts in this field to ensure you are always compliant and your employees are paid on time. Call us on +44 1825 763378 or +44 1903 442511 or email info@team4bookkeeping.co.uk

Why Use A Payroll Specialist?

Payroll can be complicated and time consuming irrespective of whether you have a small or large number of employees. And over the last 12 months there have been other complications thrown into the mix including furlough payments and Brexit. However, getting payroll right is crucial for the success of your business. It involves making sure your employees get paid the correct amount and on time and you must ensure you are not breaking any laws as penalties from HMRC can be quite severe. In the latest article from team4 with offices in East Sussex and West Sussex, we look at payroll in more detail. We discuss the options you have, what’s involved with payroll and the benefits of outsourcing to a dedicated payroll specialist.

Options available for payroll

You have 3 options for operating PAYE. The first is to do it manually yourself. However this can be risky and will take a lot of your time. You must also be absolutely confident that you will do it correctly. Secondly, you could hire an accountant although this could be an expensive way of doing it and you will need to discuss the services they offer. The third option is using a payroll specialist and this could be the best option, as they will accurately pay your employees with minimal chance of errors.

Choosing a dedicated Payroll Bureau to take control of your payroll has lots of advantages

If you choose this option, most payroll companies or bookkeepers that have a dedicated Payroll Bureau will interview you to discuss your specific requirements. Their aim is to streamline your payroll process and minimise your PAYE liability. They will also register your payroll with HMRC and deal with all the forms involved.

  • Employee and employer National Insurance (NI) contributions
  • Statutory Sick Pay (SSP)
  • Statutory Maternity and Paternity Pay
  • Childcare vouchers and student loan deductions
  • Payment administration including P14s, P35s, P60s and P11Ds and all year-end forms
  • Transition to RTI (Real Time Information)

Benefits of outsourcing your payroll

Your payroll will be taken over by a payroll specialist to give you complete peace of mind.

  • Tax obligations and payroll responsibilities will be carried out accurately and on time
  • Stay up to date with the latest regulations and required paperwork
  • Tailormade solutions to suit your business
  • Smooth transition from your current system
  • You can be involved as much or as little as you would like
  • Ensure compliance with the latest regulations including auto-enrolment pension requirements
  • Reduce the need for training in-house payroll staff
  • Free up your precious time

Changes to Payroll in 2021

There are many changes that have been announced for payroll in 2021 including new rates of National Minimum Wage (NMW) and the National Living Wage (NLW). For the first time NLW will be extended to 23 and 24 year olds. Statutory Allowances are going up as well as Statutory Sick Pay. If you do need any clarification, or any help processing those furlough payments, please get in touch with team4.

How can team4 help your business?

team4 has its own Payroll Bureau with payroll specialists on hand to take control of your payroll. Many of our clients have 50+ employees and some accounts well over 100. Payroll is just part of the service we offer and our aim is to provide a seamless link working as part of your team. We think it’s important that you know just how much it’s going to cost you if we do your payroll. That’s why we have a simple pricing structure with a fixed fee for you every month and no hidden costs. If you would like team4 to quote you on your payroll, call us on +44(0)1825 763378 or email info@team4bookkeeping.co.uk