Payroll is a business function that can often just occur in the background of a business, with processes developed over time out of necessity rather than design. But as an agency with a growing number of contractors to manage, payroll can quickly get out of hand and lead to non-compliance.
Payroll non-compliance can have severe penalties, some of which you might not have considered. To raise awareness ahead of this year’s National Payroll Week (which falls on 5-9th September), we look at why payroll compliance is so important to the success of your business.
Starting with the most obvious consequence of non-compliance, and arguably the most painful, fines.
Payroll compliance is enforced by HMRC, and employers can face penalties for failing to meet submission deadlines, not paying the right amount of tax, pensions benefits or holiday pay, failing to notify HMRC of certain changes and for submitting incorrect information or documents. This means that there are plenty of opportunities for non-compliance. With so many opportunities to get things wrong, non-compliant agencies can find the fines quickly add up, with catastrophic consequences.
Most business owners have an exit strategy right from the founding of a business, which will often include a merger or sale of the business. Any instance of non-compliance can have a negative effect on the value of the business, as well as put off potential buyers.
For example, penalties arising from Promotion of Tax Avoidance Schemes (POTAS) can continue to affect businesses for up to six years.
In addition, non-compliance can negatively affect your businesses credit score, making it harder to access the best value business loans and finance options.
Repeatedly failing to pay contractors on time or paying them incorrectly could lead to loss of staff. In this candidate led market, where demand for quality workers far outstrips supply, this could be costly for agencies who want to retain the top talent.
Having the reputation of a badly paying agency will also affect your ability to attract new contractors and clients.
While compliance has a reputation for providing an additional headache for businesses, there’s no avoiding the fact that compliance makes things clear. Compliance legislation is designed to protect workers and give businesses a clear roadmap to follow.
Meeting compliance obligations will help contribute to an organised approach to payroll and ensure ordered systems which mean that everyone gets paid on time, and in the right way. This can provide valuable peace of mind for both agency and contractor.
Knowing that your payroll processes are completely compliant means that as a business you can afford to be completely transparent about your ways of working. This transparency boosts trust in your business and ensures a better reputation. This will have a huge effect on your ability to attract and retain the top candidates and the best clients.
We at JMK take payroll compliance very seriously, it’s our job to worry about it so you don’t have to. That’s why we offer several payroll solutions which all provide complete compliance and peace of mind. If you’re not sure which of our solutions is right for you, don’t hesitate to get in touch and we can guide you on which level of payroll support will best suit your business.
Since 2002, JMK have been compliantly consolidating back-office, accountancy and payroll functions.
We have evolved to provide a range of expert services; such as Funding, becoming a leading provider to the contracting industry.
We know every agency is different in some shape or form, even if only by a little, but important bit. Combining our knowledge and experience of multiple sectors enables JMK to support you all from recruiters and payroll, through to finance, compliance and management.
With JMK as your trusted partner, even the smallest team can process the largest payroll, regardless of payroll type.
Have a look at the wide range of services our Funding can provide to you and your business, it is far more than just payroll and finance.