No Matter How Big or Small Your Business, Payroll is Complicated

July 6, 2021

No matter how many employees your business has, sorting out your payroll requires time and attention to detail. The more employees you have, the longer it takes and the more chances there are of errors. If you have a few hundred employees, then you may well want to employ someone just to run payroll, but then you have the cost of that employee as well, so even then you are almost certainly financially better off outsourcing.

The problem for many companies is that their payroll is not large enough to justify having a full-time employee running it, meaning that it has to be done by someone in house alongside whatever their other role is .This creates further issues because someone carrying out payroll internally will require adequate training. Even then, there is still a considerable chance of making mistakes because payroll is not their area of speciality.

One of the main issues with payroll is that it involves tax, which tend to have big repercussions if not dealt with accurately. It is so easy to make errors when you start doing all the different calculations that are involved. When you make errors in these calculations you can run into fines from HMRC as a result. It can also cause issues with your employees because you can get into a situation where you’ve potentially not deducted enough in tax, and then in one month you have to deduct a larger amount to compensate for the previous month, and this can cause a lack of trust and resentment to grow between you and your employees. So not only do you have to pay a fine, but you have potentially disgruntled employees at the same time.

For every employee in each pay period, you have to calculate their hours and verify them for accuracy, and then multiply by the number of hours. Then you have to calculate the tax and deduct it to get the final amount to be paid.

This is not so bad in itself with an employee who does the same number of hours in each pay period, but you may then have to calculate a rate for overtime. You may also have salespeople who earn a commission, so their pay cheque is going to be different each month because their sales will be different.

Once you’ve got the final figures, you then have to produce payslips and cheques and send them out to each employee. You may also have some employees who have their pay paid directly into their accounts, so you have to take care of that as well. Bare in mind you’ll have to keep all the records securely for tax purposes and for annual accounts. You’ll also have to prepare and submit all the tax returns and pay the appropriate amount to HMRC. These things simply make up a fraction of things that must be considered when handling payroll. Other things to consider include statutory sick pay, maternity leave and more.

This is why so many companies today prefer to use our payroll solutions in the UK at Pay Check. For a single monthly fee, you can get rid of the whole lot in one stroke. Our payroll solutions in the UK can take over everything for you so that you can get on with doing what you should be doing, and that is running a profitable business.

This article was written by
Pay Check Team
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