This year, like 2020, is one of change. Alterations to the legislative environment affecting payroll practitioners have come on top of seismic shifts in the way people work and, often, how they are paid.
For a small business, the difficulties might feel particularly acute, with a changing workforce potentially leading to reduced headcount and new recruits, as well as cover for temporary absences. Fewer people are available to handle a growing number of tasks and keep on top of fluid working practices.
Yet businesses must strategise beyond the shock of 2020 and push for future opportunities. In doing so, you need to understand how you’ll pay for accrued holidays, handle a workforce returning from furlough, employees in multiple locations and how this will impact expenses payments.
It’s a tricky situation, but with some preparation and the right software, growing businesses can navigate payroll problems with ease. Joanne Pringle, payroll product manager at Sage, believes the solution is to create a solid platform of information and processes from which you can work.
“When you have all the set processes mapped out, it allows you to have a laser-focus on changes when they come in,” she explains. “If you don’t have them in place to begin with, getting payroll right is much harder.
“With any software, you need a really good starting point. For payroll, make sure your records are inputted accurately and kept up-to-date. Has anything changed with your employees? If employee records are accurate then you’ll have a really good starting point.”
Be prepared to seek help
Keeping things clear and simple has never been more important, especially against the backdrop of a global pandemic which is likely to have a significant impact on factors like headcount, furlough payments and hours worked.
Once the basic processes are in place, seek advice from the many sources available – and focus on what’s important, filtering out anything that will not impact your business, then look to automate every task that does not need to be carried out by a human.
“Sometimes you feel like you should know everything, but the truth is you can’t,” says Pringle. “So seek advice from professionals like your accountant and check with government bodies such as HMRC and the Pension Regulator, or access useful digital resources such as Sage Advice.
“In a business where individuals take on many roles, it’s important to automate everything you can. Ensuring day-to-day tasks are taken care of can be very helpful, as can automating information coming in, so you’re not chasing the same people each week for the same kind of details.”
Automating payslips and giving online access to your team , for example, has wider benefits: employees have information at their fingertips, meaning they can answer questions from their bank or a partner, for example, and don’t have to come to you with requests for data.
The right software pays dividends
The compliance landscape changes every year, so payroll executives must update data and procedures regularly. This is one reason it’s vital to adopt the best cloud-based software, recognised by HMRC and capable of delivering live compliance updates.
Pringle says: “With cloud-based software, updates are automatic taking the headache away from manual upgrades. Payroll software which is HMRC-recognised such as Sage Payroll for instance will keep you up to date with the latest payroll legislation, so you can focus on changes within your business and what they mean to you.”
For example one of the key changes in this tax year was to the national minimum wage. As usual, there were small increases to the amount people are paid, but most significantly the age bands have changed as well.
Whereas, previously, people aged 21-to-24 were in the second wage tier, this year those aged 23 and 24 will move into the top band. That could impact costs, so it’s worth reviewing the rates to understand how your business is affected.
You must understand the impact this has on your bottom line, but good software will provide you with the information, tools and automated processes to ensure you understand the parameters of what needs to be done.
“If all your data is inputted accurately, you can run salary reports and take action based on the results,” says Pringle. “It will inform decisions and aid conversations with the business owner, if that isn’t you.
“Understand the data in your software, run the reports and check what the insights tell you. How will comparing payroll 12 months apart help you project into the future?
“Get the full value of your software. We are often time-poor and just want to get the job done but it is worth finding some time to explore the new features in your software to see how they can enhance your process and help your business work smarter. In Sage’s case via What’s New? Updates in products, webinars and digital support Sage Advice.”
Recent events will have an impact on payroll delivery and compliance for years to come, but with the right plans and the best tools, you can tackle whatever new challenges the future throws at you.
This article was sponsored by Sage, the global market leader for technology that helps small and medium businesses perform at their best