[UK] Payroll compliance risks proving costly for small businesses

New research has highlighted the financial impact of payroll compliance risks for the UK’s small businesses, with payroll errors affecting 84 per cent, International Accounting reports.

Employment Hero surveyed 1,000 small business leaders and found that 40 per cent have incurred penalties due to payroll issues, resulting in financial losses of thousands.  

Many businesses reportedly continue to struggle with outdated processes, despite spending an average of £2,724 per month to outsource payroll. Smaller SMEs spend £1,625, while the larger ones spend £3,408.  

More than half of respondents reported making payroll errors on multiple occasions, primarily due to outdated systems and processes. 

Manual processing is still prevalent, with 31 per cent of businesses relying on spreadsheets or forms for payroll, and that figure rises to 44 per cent for the smallest SMEs with five to 19 employees. Issues such as incorrect wage calculations and late or missed payments are common. 

According to Employment Hero, the most frequent payroll errors reported were incorrect wage calculations (48 per cent), late or missing payments (38 per cent), incorrect hours (36 per cent) and incorrect tax calculations (27 per cent).  

Amid evolving employment legislation, 67 per cent of businesses reportedly expressed concern about employee complaints linked to payroll. 

Technology concerns exacerbate these challenges; 70 per cent of SMEs were worried about keeping up with payroll tech. Such concerns were highest among businesses with 100–149 employees, who struggle to remain compliant without the right tools. 

Among the most frequently cited barriers to switching from manual payroll were limited expertise (38 per cent), lack of time to manage (36 per cent), cost (35 per cent) and lack of time to onboard (31 per cent).  

Employment Hero announced free payroll software for all UK businesses to help address SMEs’ struggles.  

Kevin Fitzgerald - Employment Hero UK managing director - said, “With the rising National Minimum Wage, increased National Insurance Contributions and tougher enforcement of employment law, there has never been a more complicated time to be a small employer.  

“Our research shows payroll has become a compliance minefield. SMEs are trying to do the right thing, but outdated systems and limited resources are costing them dearly. No small business should face fines just for lacking the right tools, and that is why we are making payroll free. It is too fundamental to get wrong. If we want SMEs to power growth and employment, we need to level the playing field – starting with payroll.” 

Source: International Accounting

(Quote via original reporting)

New research has highlighted the financial impact of payroll compliance risks for the UK’s small businesses, with payroll errors affecting 84 per cent, International Accounting reports.

Employment Hero surveyed 1,000 small business leaders and found that 40 per cent have incurred penalties due to payroll issues, resulting in financial losses of thousands.  

Many businesses reportedly continue to struggle with outdated processes, despite spending an average of £2,724 per month to outsource payroll. Smaller SMEs spend £1,625, while the larger ones spend £3,408.  

More than half of respondents reported making payroll errors on multiple occasions, primarily due to outdated systems and processes. 

Manual processing is still prevalent, with 31 per cent of businesses relying on spreadsheets or forms for payroll, and that figure rises to 44 per cent for the smallest SMEs with five to 19 employees. Issues such as incorrect wage calculations and late or missed payments are common. 

According to Employment Hero, the most frequent payroll errors reported were incorrect wage calculations (48 per cent), late or missing payments (38 per cent), incorrect hours (36 per cent) and incorrect tax calculations (27 per cent).  

Amid evolving employment legislation, 67 per cent of businesses reportedly expressed concern about employee complaints linked to payroll. 

Technology concerns exacerbate these challenges; 70 per cent of SMEs were worried about keeping up with payroll tech. Such concerns were highest among businesses with 100–149 employees, who struggle to remain compliant without the right tools. 

Among the most frequently cited barriers to switching from manual payroll were limited expertise (38 per cent), lack of time to manage (36 per cent), cost (35 per cent) and lack of time to onboard (31 per cent).  

Employment Hero announced free payroll software for all UK businesses to help address SMEs’ struggles.  

Kevin Fitzgerald - Employment Hero UK managing director - said, “With the rising National Minimum Wage, increased National Insurance Contributions and tougher enforcement of employment law, there has never been a more complicated time to be a small employer.  

“Our research shows payroll has become a compliance minefield. SMEs are trying to do the right thing, but outdated systems and limited resources are costing them dearly. No small business should face fines just for lacking the right tools, and that is why we are making payroll free. It is too fundamental to get wrong. If we want SMEs to power growth and employment, we need to level the playing field – starting with payroll.” 

Source: International Accounting

(Quote via original reporting)