16 May 2021

Steve Watmore, product manager at Sage looks at how to distinguish fact from fiction, dispelling untruths by highlighting top-tips for keeping in the know

The UK has always been exceptional at harnessing talent and creating entrepreneurial businesses of all scales. The thought of managing your own business’ finances can seem like an uphill battle, and many people balk at the idea of payroll – believing it to be a labyrinth of legislation and time-consuming.

Myth: You need to be a legislation expert – One of the most common misconceptions of payroll is that you need to be a legislation expert. Although regulations can change regularly, keeping up to date with such changes needn’t be such a burden. Businesses must take advantage of government sites, such as Gov.uk, which offer all the legislative knowledge required. Through HM Revenue & Customs (HMRC) business owners can follow step by step guides that help completion of certain regulatory forms and returns, such as self-assessment tax returns, and get real-time updates to changing regulations.

Myth: You need to be a mathematician – Another fallacy of payroll is that you need lots of subject specific knowledge to be able to carry it out effectively. People believe that to carry out payroll obligations you need to be a wizard in mathematics. Needing to be able to calculate each employee’s gross and net pay, whilst ensuring you’re withholding the correct amount of money for taxes each pay period, can seem like a hugely complex task.

In fact, a wealth of information from payroll processing to understanding pensions can be found by attending payroll seminars, watching webinars and attending industry conferences, allowing you to soak-up topical advice about legislative changes and new payroll procedures.

Myth: It takes a lot of time to do payroll – Payroll software closes the gap between a business and HMRC, helping the recording of employee details; calculating employees’ pay; reporting payroll information; and working out employees’ statutory payments. Having the technology to help stay on top of records, cashflow and business information, fundamentally eases the admin burden and ultimately allows focus on running the business.

Myth: I’m not technical enough to use the software – Increasingly, businesses are demanding complex, labour-intensive tasks be carried-out. To counteract this problem, automation offers a way to save time and increase overall efficiency. As such, payroll software offers functionality with automated payroll calculations and submissions; fully HMRC-compliant software to help avoid mistakes; and easy-to-create payslips with security encryptions.

Myth: It’s easier to let someone else do it (outsource) – When things get a little confusing in the payroll world, it can be easy to want to turn to someone else to take the reins. Having additional support with finance and payroll isn’t a bad thing. However, understanding the going and comings of the business’s finances allows directors and owners to truly be at the helm of the business and enables them to steer it in the right direction with the benefit of having more control.

In this way, they will be able to better manage payroll compliance and in turn employee expectations. Not only does running payroll in-house enable enhanced security and data protection, but also allows payroll errors to be caught at speed.

Myth: Staying as a sole trader is easier than hiring employees – This is perhaps the worst myth of them all. The false impression that running a business alone is easier than having to deal with employee payroll management can leave sole traders burning out quicker than expected.

Holding back and allowing fears to become a hinderance has never been the path to business triumph. Self-service models of payroll exist for the very purpose of making it simpler to review and approve requests in real-time by giving your employees more responsibility. So instead of recoiling from expanding your business and employees, find flexibility in the hundreds of payroll solutions available. 

Approaching your payroll management doesn’t have to be as tough as it first appears. The key is to not be frightened by fictions of payroll disasters. Whether it be complex legislation, confusing technology or time-poverty, with so many payroll solutions out there you don’t have to search far to source clear guidance. Help is at hand and software is available to makes running payroll a walk in the park.

Featured in the June 2021 issue of Professional in Payroll, Pensions and Reward. Correct at time of publication.