5 common mistakes companies make when doing payroll

Payroll is an essential part to any business, making sure that all of its employees get paid properly for their work, and in accordance with all HMRC regulations.

doing payrollThere are a number of aspects relating to payroll and any potential mistakes can have profound implications on the business including penalties, lack of payment and breach of compliance. With this in mind, we provide 5 common mistakes that are made with payroll and how you can prepare your business to overcome them.

Missed deadlines

One very common mistake that companies can make when completing payroll is to miss payment deadlines for employees, National Insurance Contributions and tax. Missing the deadlines for these aspects of payroll can result in interest charges and penalties charged to a company, varying in severity depending on the scale of the missed deadline. Therefore, it is crucial for companies to be aware of the dates for such payroll payments, and furthermore to complete all aspects of its payroll in a timely and efficient manner.

Misclassification of employees

Another common mistake that can lead to detrimental consequences for a business or company would be the misclassification of its employees within the process of payroll. With an overall increase in the country’s number of temporary workers, freelancers and contract workers, it can often be a challenge to keep up with the classification of all employees within the company payroll.

This can lead to incorrect reports on such payroll features as tax, leading to complications, confusion, and more time spent on fixing the issue, reducing overall efficiency and productivity of a company. This is particularly prevalent in companies where there is global payroll and how you manage this is crucial. In these circumstances, you can always look at using professional HR companies or payroll specialists to assist. Read more about outsourcing your payroll.

Heavy reliance on software programing

Although implementation of payroll software can help to significantly increase efficiency within the payroll sector of a company, there can tend to be over-reliant on such software. This can result in failing to input necessary data into the system which can lead to significant miscalculations in employee payroll.

Again, similar to that of the misclassification of employees, this can lead to similar complications and extended periods of time spent on fixing the miscalculations.

Poor data entry

With larger companies, it can be difficult to keep up with the growing list of employees that naturally comes with any thriving business. This can extend to the payroll sector, with mismatching employee details as names and National Insurance numbers costing businesses both time and money to fix this. Clerical issues such as delays on employee payments can lead to low morale and resentment, giving managers questions to answer too. This shows the overall value of the HR department and payroll to ensure a smooth sailing of an organisation.


With the seemingly ever-changing nature of employment and payroll legislations, it can often be difficult for companies and businesses to keep up. However, challenging as it may be to keep up to date, compliance is vital to ensure a company protects itself against significant penalties and other such repercussions. Keeping up to date on any and all changes to such employment and payroll legislations and further complying with them can therefore help a company to minimise the risk of any penalties, fines or more.

Awareness of such common mistakes listed above and the dangers they often bring can therefore help companies and businesses pay closer attention, and further minimise the chances of them happening.