Common Payroll Mistakes to Avoid in Your Business

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All businesses, whether big or small, must pay their employees on time and accurately. It should also follow the law when it comes to payroll. Failure to do so could lead to problems, such as unhappy staff, penalties or fines from the HMRC, and the inconvenience of fixing the errors. So, you must carefully handle your payroll to prevent these concerns. Awareness of the common payroll mistakes will help you understand more about them, so you can avoid doing them in your company. 

Not putting the right employee classification

Employees have different classifications, like full-time, part-time, and contractors. They don’t have the same benefits or compensations. For example, contractors may not be eligible for pensions, holidays, or sick leaves.

Failure to put the right employee classification could affect their payment, as they could get underpaid or overpaid. Being overpaid is also not an advantage to the employees, as they need to return the excess amount, which can be a problem, especially if they have already spent it. 

Unable to track hours worked and overtime

Employee work hours must be entered on time and error-free. If you have a system that automatically tracks and saves employees’ regular work hours and overtime, you don’t have to worry about it, as you just have to double-check that it’s recorded properly. However, if you are still using spreadsheets and entering the details manually, it can be time-consuming, and it will take a lot of effort to backtrack or find out the hours worked if you missed saving them. Moreover, overtime has a different computation. Therefore, putting the overtime hours as regular hours or vice versa could result in inaccurate pay. 

Disorganised or incomplete records

You need to have all records well-kegpt, as you need this when filing for tax returns and in all payroll concerns, from payment to answering employees’ questions. Manually keeping your records in an excel file is not only prone to a data entry error, but it’s also challenging to manage. Accounting software that automates the process makes updating, saving, and searching data easier.

However, some startups and small companies may not have the budget for this software. An option is to outsource their payroll. For example, businesses in the heart of London can outsource accountants in Central London, like those from, to handle their payroll efficiently. These professional outsourcing companies have software that ensures precise and organised record management. If your needs expand in the future, you can get more accounting services they provide or leave the entire accounting needs of your company to them. This will save you the time, money, and effort of hiring and paying an in-house accounting department. 

Incorrect payment

Most payroll mistakes result in incorrect payment. Although other factors like system problems could cause the problem, it’s often caused by human error. But, again, automation can help avoid this problem. You don’t have to calculate everything manually, and there’s also a lower chance of mixing details as employee information is saved in the system. 

Prevent these mistakes with your payroll system to avoid problems with HMRC, keep your employees happy, and strengthen your credibility

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Sarah Meere
Sarah Meere
Executive Editor

Sarah looks after corporate enquiries and relationships for UKFilmPremieres, CelebEvents, ShowbizGossip, Celeb Management brands for the MarkMeets Group. Sarah works for numerous media brands across the UK.

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