10 Tips to Help You Get Payroll Compliance Right Every Time

Tips to Help You Get Payroll Compliance Right Every Time

Payroll is a crucial aspect of your business. If you don’t put in your best effort, you can find your company failing. Employees don’t want to work for free or receive less pay. However, it isn’t the only aspect you should be concerned about. Payroll compliance is important for your business to avoid penalties and fines arising from breaking compliance laws.

Achieving payroll compliance is challenging. You have to deal with stressful deadlines, repetitive checks and endless calculations. While employees don’t have anything to worry about when payroll approaches, business owners deal with payroll issues throughout the month. While you cannot change compliance demands, we have a few tips to help you get it right.

Keep employee records up-to-date

Checking if you have the right employee information is an underrated task, but it is critical to the payroll process. When new staff join the company, you need to collect the relevant personal information for processing payroll. Information on employees also change when people move, get married or are promoted, and you need to be on top of any changes in employees’ personal life that affect payroll. Your job is to ensure your employee records are accurate and error-free. Nowadays, you can find self-service tools in payroll software that allow employees to update their details online.

Keep up with payroll legislation

Payroll legislation regularly changes as the government adds new statutory deductions or increases income taxes. You need to stay up to date with the changes to avoid non-compliance. How do you ensure you don’t miss out on new legislation? Attend events and seminars hosted by tax professionals, payroll experts or the Revenue Commission. Participating in webinars and attending conferences improves your knowledge in the industry. The events offer guidance on new payroll procedures and legislative changes. You will also learn about new regulations, innovations around payroll and industry trends that affect your payroll process.

Stick to deadlines

Do not miss tax deadlines for statutory deduction and taxes associated with payroll. You need to submit payroll information and remit taxes on time. When you complete a payroll cycle, you need to start the next on time to avoid missing any tax deadlines. You can create a payroll calendar to remind you of the deadlines for each statutory deduction. When you miss deadlines, you attract penalties and fines. You also open your company to potential investigation for tax-related offences. Such investigations are damaging to your reputation and negatively impact investors’ confidence.

Be careful around compulsory staff benefits

Every business provides monetary and non-monetary benefits to employees. For instance, you may have paid leave and contributions towards pension funds. You need to be aware of the legislation governing the benefits and the statutory deductions. You have to be certain about the legislative changes that affect the benefits. For instance, life and medical insurance are compulsory if your business exposes employees to risks. In the UK, a pension scheme is a legal requirement for every employer, and you have to ensure you fulfil the obligations to avoid fines.

Use audit trails and reports

Audit trails are important in the payroll process. It shows the source and reason for every payment during auditing and protects your business from fraud. Using payroll software can create the best audit trail in case of payroll changes. If you make unusual payments or changes to the payroll, the audit trail can track the transactions and show related invoices and ledgers that validate them. Generating payroll reports is also important since you can check for variances with the previous payroll and highlight the changes. Combining reporting and audit trails provides insights into the accuracy of the accounting records and demonstrates your company’s financial health.

Train employees on attendance procedures and time

A consistent attendance policy can reduce non-compliance from mistakes made during tracking hours. Train your employees on the time and attendance policies of the company. It includes the process of clocking in and out, tracking hours and taking breaks. The employees should be aware of the company policy on overtime work and how to record off the clock work. You can provide tutorials and online training to ensure everyone records their attendance correctly. Having accurate work hours helps you prepare the correct payroll.

Ensure workers understand their salaries

It is important to manage employee expectations to keep the company compliant with payroll requirements. Workers need to be part of the payroll process, understand what’s expected of them and help the company maintain accurate payroll records. The first step is to ensure your staff understand their salaries. Do they earn hourly rates, commissions or monthly salaries? How do you calculate the wages? When employees understand the company’s payroll process, they help you maintain accuracy by informing you of mistakes in their salaries when they get the paychecks. You need to create a comprehensive policy to guide your employees on salaries and the practices for all issues that affect pay. It will help them understand what they expect throughout the payroll cycle.

Calculate wages correctly

The major cause of non-compliance is incorrect wages and overtime pay calculation. Some business owners make mistakes when calculating the wages and commissions, while others fail to pay overtime work. You can avoid complaints arising from inaccurate calculations by using payroll software to prepare the salaries. You have to show your employees how to calculate overtime pay and commissions. Some payroll mistakes also arise from failure to track the working hours correctly. If you don’t track the work hours properly, you can attract fines and penalties. Hence, it is important to ensure the tracking process complies with the law.

Use employee feedback to improve the payroll process

You can avoid payroll issues by allowing your employees to contribute to the process. Seek feedback from employees or monitor complaints made concerning past payments. From the complaints, you can identify the hiccups and develop ways to improve compliance. Taking employee advice also gives them a voice, and they can share concerns and suggest areas for improvement. You can solicit feedback through surveys or schedule a meeting to discuss the payroll issues affecting them. You should also ensure the business payroll policy is widely available, and your employees can access it anytime and make suggestions.

Choose a suitable payroll option

The payroll process is complicated and repetitive. It helps to have payroll software or a self-service model to simplify repetitive processes and improve the accuracy of the accounting records. A self-service model reduces non-compliance by allowing employees to update their records and generate timesheets from digital time tracking systems. It saves you valuable time that you could use to complete other business functions. Payroll software also creates an audit trail, and you can track the tax fillings and salary payments with a few clicks.


Payroll compliance is complicated, but you can make it manageable with the right procedures. You can also find the right tools and experts to help you stay compliant and alleviate any worries concerning the process. Always stay informed with the latest legislation and use payroll software to improve the accuracy of your accounting records. Managing your employees’ expectations and seeking their feedback can also improve compliance.

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