How to ensure your business’ payroll runs smoothly

As a business owner, it’s crucial to ensure your payroll system is effective and accurate. Unfortunately, inaccurate payroll is an issue among many UK businesses. In their recent report, financial planning software specialists MHR found that between the period of 2020 and 2021, 94% of British businesses reported making mistakes with payroll. The report also revealed 61% of employees have been affected by receiving incorrect pay or being paid late.

Making a mistake with your payroll could have serious consequences for your business, both financially and reputationally. Furthermore, it could put significant financial strain on your employees.

In this article, we look at how you can ensure your business’ payroll runs smoothly.

Utilise technology and automation

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There’s a wide range of technology and automation systems which can be used to simplify the payroll process. Despite this, MHR’s report showed 70% of UK companies incorporate manual work into their payroll processes, while over 30% of organisations still use paper timesheets and payroll forms.

Human error is inevitable but taking advantage of payroll technology and automation services could iron out any kinks in your current system and improve the accuracy and efficiency of your payroll process.

Carry out regular audits

No matter whether your payroll process is carried out manually or via an automated system, it’s essential to conduct regular audits to prevent mistakes. You should check the employee data you have on record is correct and that the information is updated when a staff member informs you their details have changed.

Ensure details of salary and tax codes are amended when someone receives a pay rise or is promoted to a higher paying role. It’s easy for this information to slip through the cracks and cause problems in the future if your records are not kept up to date.

Be aware of payroll updates

There are certain tasks you must do when running payroll for your business and these may change or be updated as time goes on. Failing to complete these could result in a fine from HMRC and if the issue is prolonged over time, it could have serious consequences for your business.

Being aware of what is expected of your business in terms of financial reporting and tax regulations will make it easier to keep on top of your payroll responsibilities and avoid payroll mishaps.

The implications of inaccurate payroll

If your business’ payroll is not handled appropriately, you could face action from HMRC which could have a negative impact on your finances and even the reputation of your business.

Unreliable payroll won’t be tolerated by many people, and you may end up with unhappy employees if the issue persists. In fact, MHR’s report found 50% of employees would consider leaving their employer if their pay was wrong on numerous occasions.