The Ripple Effect: Consequences of getting payroll wrong

04/05/2023

Payroll plays an essential role in your business. Ensuring accurate and timely payroll management is not only a legal requirement but also a fundamental contributor to employee satisfaction and morale.

Errors in your payroll can result in several problems, such as the following:

• Compliance issues and penalties

You are legally required to report your employee’s payroll information to HM Revenue & Customs (HMRC) so that both you and your employees pay the correct amount of tax and National Insurance contributions (NICs).

Failure to pay the correct amount of tax can result in hefty fines so keeping on top of this is essential.

HMRC levies fines for late, incomplete, or inaccurate submissions of payroll information.

The total fine that you owe depends on how many employees you have, but the late filing penalties can be up to £400 per PAYE scheme.

If you make errors that HMRC sees as careless or deliberate, you will also face fines, which can vary depending on the error.

• Employee dissatisfaction

Your employees want to know that they will be paid the correct amount on the date that has been agreed upon.

So, if payroll mistakes cause delayed salary payments, your employees will not be happy.

This dissatisfaction can have a ripple effect on employee morale, leading to reduced productivity and an overall negative impact on the company’s performance.

• Increased administrative burden

Rectifying payroll errors takes a lot of time and effort. You need to check through previous records to make sure the new information you supply is correct.

This means you have less time to focus on taking your business to the next level.

How can you avoid payroll errors?

Invest in payroll software

Utilising payroll software can significantly reduce the likelihood of errors.

These systems automate calculations, generate reports, and facilitate the timely submission of payroll information to HMRC.

You will need to choose a reliable and compliant payroll software that meets your business needs.

Keep up-to-date with legislation

Payroll legislation is constantly changing, and you need to stay informed about these changes to ensure compliance.

This includes paying the correct amount of tax, complying with filing regulations, and adhering to National Minimum Wage laws.

As payroll experts, we can advise you on any upcoming changes that will impact you and how to prepare.

Outsource your payroll function

Getting payroll right can be complicated but it is essential.

Outsourcing your payroll function will give you the peace of mind that your employees are being on the correct amount and that your payroll processes are compliant.

At WMT, we can deliver your payroll for you so that you can dedicate more time to growing your business.

Need advice on payroll? Get in touch.