Small businesses have to face several complications. There are a lot of changes in dynamism and constant disruptions across the strands of competitiveness, leading to challenging situations on how and where to manage and execute the work and by whom. There is so much to contemplate, so much to consider, and so much to incorporate into the life of a small business owner that, at times, it feels like constantly walking on a tightrope, a small stumble, and the whole thing collapses.
Of all business processes, one of the most complex problems that small businesses face is payroll processing, as, generally, it is an in-house process. Indeed, payroll has several complex components, and this is why many employees and managers find the settlement of a payroll problematic, even with experienced CFOs. But if something goes wrong, it leads to several other issues, including compliance issues, which is a big NO for an employer. Secondly, it could also lead to employee turnover, which is yet again another big NO.
It is also to be noted that there will always be some level of generic issues that can be encountered since processing payroll in-house is not easy. However, as the owner of a small business, you must also fully understand that it has to be done right. In this case, we have listed five common payroll problems below and how to overcome them using payroll software for efficient processing of payroll. You can also utilise outsourced payroll services to overcome these challenges.
- Compliance with laws and regulations
Business compliance gets more complex and challenging over time. There are new laws that are passed, or changes in the existing laws, every year. Also, the pandemic, gave rise to new regulations, accounting for massive changes unfolding in the workplace. Presently, there are over 180 federal labor laws, that are fairly individual for several types of businesses.
Payroll compliance on its own is a tough job, and it comprises several acts that regulate wages, overtime, medical leave, unpaid leave, and so on, covering contract labourers.
Maintaining compliance with the organisation’s payroll and HR is no joke or a mere task that can be handled by any amateur with no touch on the legal framework or laws governing the organisation. Penalties for non-conforming to the standards of the law are stern. Yet the overall effect is that it contributes more to the workload of your payroll department.
- Maintaining or lowering payroll costs
Generally, small businesses consider payroll a non-productive cost. Therefore, they are always under pressure to manage it cost-effectively. Hence, they are also reluctant to make huge investments in payroll software, as it will not only lead to incurring investment towards payroll software but also the training and requirements of IT experts on premises, along with compatible PC equipment. Secondly, the need for a backup system for the data also comes into play to protect against data loss in any circumstances.
This makes the choice of payroll software even more daunting. How do you justify and understand which software is the right one besides being pocket-friendly for small businesses and ensuring that the company does not end up overpaying? Besides, how do you ensure that the solution selected is compatible with your business in the future as your business expands?
- Hybrid Workforce
If you have some of your staff working from an office location and some working remotely, that means you are employing a hybrid workforce. Looking at the current scenario, remote or hybrid employee presence for small and medium-sized enterprises is significantly higher (63%), compared to those found in a single workplace (37%). Yet, having a blend of employees leads to extreme flexibility and convenience for the workers. But, it also causes extreme complications as far as payroll is concerned.
On the other hand, there are several other complexities of a hybrid workforce, such as:
– you employ part-time staff or
– full-time employees but in different regions or countries
– remote staff in different regions or countries to support your client 24/7,
Thus, you are bound by various laws relating to part-time employees, payroll laws, and taxes applicable in those regions or countries. A completely different set or set of rules for employees amplifies the complexity of getting payroll.
- Overworked payroll administrator
Payroll administrators are burdened with responsibilities, as we’ve discussed above. Handling payroll documents, paychecks, direct money deposits, and other routine document maintenance is also not an easy task to perform. Still, several small businesses do not even have a proper HR department. Instead, they work with a single HR specialist. Whether a team is big or small, most of their work is concerned with the coordination of the various routine operations that are fundamental to organisational processes, which essentially leaves them with little to no time for planning and other such activities that hold great value to an organisation.
Payroll is one of those activities that demands too much time and energy. Therefore, minimal time is left for assessing and identifying methods to optimise the process. With so many priorities for small businesses and a lack of adequate resources, challenges related to the payroll process keep moving further and further down the list.
- Manual payroll method
Professionalism in payroll is relatively low in small businesses and is considered a time-consuming process because most companies still rely on basic payroll software and manual processing, leading to constant juggling between multiple payroll spreadsheets in and out of different software. However, it also opens the door to increased payroll mistakes, such as misclassification, overpayments or underpayments, incorrect tax compliance, etc., which will take more time to spot and resolve, besides leading to payroll penalties.
Another weakness that most organisations experience when they use manual payroll processing is that it can also be incomplete, due to inconsistencies. This is because, if there is more than one staff processing payroll, there are chances that they could adopt different methods of calculating and processing payroll. Thus, generating standard payroll data can become difficult, along with running reports and performing useful workforce analysis.
Payroll Outsourcing – A system that solves payroll complexity
Interestingly, the difficulties in the payroll process do not necessarily have to be among the things you just endure. There are payroll solutions that can help you deal with the above complexities.
When you have the best HR and payroll technology to handle the requirements of your business, you can easily eliminate these challenges.
- You can easily automate the system with paperless workflows and a centralised payroll- system.
- Record and process payments for employees with check accuracy that covers payroll, taxes, benefits, and more, ensuring early or on-time payments.
- Efficiently stored, retrieved, and updated employee records while effectively providing information to other departments of the organisation.
- Adhering to all the necessary pay and tax legal requirements in any country where you have employees.
- Ensuring visibility required in your workforce, generating reports, and evaluating your people processes.
- Expanding the business in the way and size that is necessary without the concern that the system cannot handle it.
However, as discussed above, hiring the best HR and payroll technology can become a challenge as it requires huge investment (towards payroll software and hiring an in-house payroll team).
As a result, it is evident that, besides having so many advantages associated with hiring the best HR-Payroll team and payroll software, small businesses need to look out for cost-effective solutions that can help overcome challenges.
One of the best and most cost-effective solutions in such a scenario is going for payroll outsourcing. There is no excuse for you, being a small business, not to opt for outsourcing the task and taking advantage of partners’ expertise.
Besides streamlining your payroll process, outsourced payroll services will help you with:
– accuracy and efficiency in your payroll processing.
– It is also cost-effective, as you do not have to hire an in-house payroll team and purchase payroll software.
– Ensure the security of your data.
– File your payroll returns
– Ensure your payroll is compliant
– Avoid late filing penalties and fines.
Apart from this, you can also check with your outsourced payroll service providers for other services, such as outsourced accounting, bookkeeping, and taxation. They can help you streamline all your processes so you can focus on other core activities and lead your business to growth.
How Corient can help you
Managing the payroll of a firm is sometimes one of the most important yet complicated things that firms, especially small business firms, do. These challenges can only be sorted out effectively through the use of technology, being more informed, and engaging professional outsourced payroll services. Thus, compliance, accuracy, and efficiency in the payroll process will not only minimise time and costs but also positively affect employees’ satisfaction and the company’s overall functioning.
Corient is among the foremost providers of payroll services for small businesses and, therefore, can help throughout the entire journey. We at Corient offer a comprehensive range of services in the UK, such as payroll, tax and VAT outsourcing, bookkeeping, and accounting outsourcing.
Find out ways through which Corient can assist you in the effective management of payroll and payroll taxes. Let us take care of your payroll obligations so you can concentrate on building a successful company.
