Top 4 payroll compliance challenges for small businesses

Compliance is a key challenge facing any payroll department and business. The responsibility is on you to ensure that you are fully compliant with all payroll and HR law and that you keep the correct records to document your company’s compliance.

This can be a daunting task, especially when non-compliance could mean receiving costly fines and even the possibility of litigation. To protect your business from such risks, check out these four payroll compliance challenges you should focus on and how your payroll software can help:

1. Don’t be late:
Filing your tax returns on time should be quick and straightforward but many businesses get caught out and end up risking penalties. To avoid this, make sure you have a calendar with your monthly, quarterly, and yearly deadlines clearly marked.

In 2013, Real-Time Information (RTI) was introduced, meaning as an employer, you need to submit your payroll information to HMRC each time you complete your payroll. This likely means you have a weekly or a monthly deadline that cannot be missed. To complete it, you need to submit your Full Payment Submission (FPS) on or before the day you pay your employees. In the case where you do not need to pay employees for a particular tax month, you must submit an Employer Payment Summary (EPS) to HMRC by the 19th of the month after the end of the tax month. You will get a penalty if you miss either of these submissions or are late making the payments to HMRC.

2. Be accurate:
Honest mistakes can be fixed but careless or deliberate wrongdoing may result in a penalty. Keeping accurate records and checking with a tax advisor when you’re unsure about an issue will provide proof that you’ve taken reasonable care. As long as reasonable care has been shown to have taken place, HMRC is unlikely to charge a penalty for an inaccuracy. Learn more about this here.

3. Pensions and auto-enrolment:
The Pensions Act 2008 requires all employers to offer workplace pension schemes and to automatically enrol eligible workers into the scheme. Since its phasing began in 2012, auto-enrolment has been a concern for many employers. Whether you hire one employee or a hundred, you have auto-enrolment duties to perform. Assessment of employees, enrolment into a pension scheme, and making data submissions to The Pensions Regulator are all part of these duties.

4. Complying with the GDPR
The General Data Protection Regulation (GDPR) is the data protection law that came into effect on 25th May 2018 in the European Union. It has since been incorporated into UK law and is now known as UK GDPR. There is little difference in the laws which means that protecting your employee’s personal data is still a priority. The processes of collecting, storing, and sharing this information must all comply with the GDPR.

Simplify compliance with your payroll system:

An efficient and effective payroll system can make compliance much easier and allows you to focus on running your business. A payroll system such as BrightPay allows you to streamline your payroll processes, your HR duties, and your GDPR obligations. For each pay period you will be notified of any submission due to HMRC and will have the option of paying HRMC directly from BrightPay’s application. You can also manage all your auto-enrolment duties from the software. BrightPay will notify you when you have auto-enrolment duties to perform, including employee assessment, enrolment, re-enrolment, sending personalised assessment letters, and of course, making deductions of contributions through payroll. When it comes to creating GDPR-compliant processes BrightPay can also help. Payslips sent to employees are password protected, and so too is the payroll software. Information on it can be stored securely.

If you’re interested in learning more about BrightPay and how it can keep you compliant, schedule a demo with a member of our team today. If you want to get started straight away download BrightPay’s 60 day free-trial. It’s an ideal way to test out the software and to make sure it’s the right fit for your business. The free trial version has full functionality with no limitations on any of the features.



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Karen Bennett
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