Anyone who has tried opening a business knows how overwhelming and stressful it can be, with payroll being one of the contributors to stress. Research shows that many startups spend plenty of time each week on payroll alone.
Thankfully, there are many things startup companies can do to free themselves from the mundane payroll tasks while making sure they pay employees on time.
Here’s a quick guide to payroll for startups.
The Importance of Payroll Management
Any company with more than one staff should have a comprehensive payroll management system to oversee its financial activities. The very purpose of payroll is to help companies in the timely payment of salaries. It also helps with other essential activities, such as processing income tax, social security, and unemployment tax.
The repetitive nature of payroll can be annoying in many cases and prone to mistakes. A reliable payroll management software can help to minimise the likelihood of errors. In addition, computers run the software that provides information to be stored on storage devices and can only be accessed by inputting login credentials. The payroll management system can also provide a breakdown of the employees’ salaries, which is crucial during financial assessment.
Most modern payroll systems, such as remote cloud solutions, are economical. The company will only require active registration for the maintenance of the database. Employee salary management solutions will only need a small number of costly resources, making it a cost-effective option. Also, the company can quickly reduce or expand its needs.
In House or Outsource Payroll?
In-house payroll is when an internal department handles the payroll for the company. The staff in charge of processing the payroll is an employee of such a company. Meanwhile, outsourcing payroll is when a company decides to hire a third-party company to process the payroll.
In-house payroll can come with benefits, but there are fewer drawbacks to outsourcing payroll. For instance, if you let JGA Recruitment Group, a specialist payroll recruitment agency, handle your company’s payroll, you won’t have to spend a long time processing your employees’ payroll. Integrating your HR functions with outsourced payroll solutions can streamline your entire HR process. It is like a blank template that will only require you to input your information and configure the software to your needs.
In addition, outsourced payroll systems use standard processes in payroll management, which closely adhere to compliance rules set by the government and other governing agencies. The strict requirements that local governments impose ensure greater compliance, saving you headaches down the road.
When Do You Need to Set Up Payroll?
Regardless of the size, every company must set up an employee payroll system from the moment they hire their first employee. In fact, before paying the first salary, the payroll system must first be established. Companies should not leave it to the last minute, as you might encounter unexpected issues that could delay the employees’ salary.
Having a reliable payroll management system can benefit the company in various ways. It can help companies streamline their HR processes and minimise costs. Furthermore, it can help to significantly reduce stress by eliminating the need to carry out endless payroll calculations that are often too complicated. And the more employees you have in your company, the more paperwork you need to process. Plus, the higher the amount of salaries you process, the higher the risk of mistakes. A reliable payroll system can help to minimise error in salary computation.
With a reliable payroll system, you will have more time to focus on the more significant aspects of growing your startup business. You can dedicate your time to marketing, business development, and other essential tasks.
Understand Payroll Legislation
Every company should be aware of the legislation on the payroll. For companies based in the UK, you should understand the UK laws surrounding paying employees to understand your responsibilities as an employer. The payroll legislation in the UK is constantly changing. Make sure you are aware of these changes.
The UK payroll Legislation also details what employers must pay when employees get sick or have to go on maternity leave. Such is called statutory pay. Currently, employees qualified for either statutory or maternity leave can receive £94.25 each week for up to 28 weeks. As for the maternity pay, it is currently 90% of the employee’s weekly earnings for the first six weeks and whatever is lower in the next 33 weeks.
All employers are required to adhere to the payroll legislation. While it might seem like a burden, it is an important matter. The legislation ensures that all employees are paid well and on time. Above all, it makes sure that everyone receives fair treatment. The legislation also makes sure that governments receive enough funding for particular programs. As the employer, it is your responsibility to pay your employees correctly. Payroll mistakes and failure to comply with the payroll legislation could cost you a lot of money for fines or penalties.
Common Payroll Mistakes
Payroll can be tricky, especially for startups with limited expertise and resources. But committing payroll mistakes could lead to hefty fines, not to mention a bad reputation for your company. Therefore, you must be aware of some of the most common payroll mistakes.
Data inaccuracies are common and usually due to human error and not updating information timely. But you must avoid it at all costs since it can be very costly and could affect business growth. Another common mistake is hiring inexperienced payroll staff, which is the norm for startups and small businesses. If you opt for in-house payroll, hire staff with enough knowledge, qualifications, and experience to ensure payroll is correctly processed and on time.
Not being GDPR compliant is also common for most companies. GDPR affects how you store data for payroll and provide data to your employees. Therefore, make sure that you stay GDPR compliant because failing to do so could lead to hefty fines, something that startup companies should avoid.
