Payroll essentials and what you need to know

Payroll, while an essential part of your business, is also one that is commonly undervalued, especially for smaller businesses where dedicated payroll software may not be used.

We’ve come up with a list of payroll essentials to ensure that your payroll is hitting the target month after month.

1. Inaccuracy in your payroll system

One of the more commonly seen payroll errors goes back to data input when adding in an employee. If any part of this process is done incorrectly it could result in incorrect payments being made and unhappy employees. For example, an incorrect tax code or tax rate means that your employees could be paying more tax than necessary, which can be a headache for you to sort.

You also need to ensure you have accurately accounted for, and paid, the hours worked by each employee. Similarly, your payroll information needs to be kept up to date with any local laws or tax law changes, otherwise your payments can be incorrect.

Triple check this data and get it right to ensure less payroll drama, or employ the services of a chartered accountant to guarantee your business’ payroll responsibilities are delivered on time, every time.

2. Security

All payroll information needs to be kept confidential and secure. Any personal information on your employees, including names, IRD numbers, address details, and wage / salary information, needs to be covered.

Many payroll packages allow for encryption software, meaning the information is scrambled unless you have the correct key to allow you to read it. If you don’t use encryption software then making sure passwords and file protections are used is crucial.

3. Overtime

It isn’t uncommon for businesses to pay overtime rates to their employees. Your payroll software can be programmed to allow for an increased rate for an employee’s weekly or monthly hours over a specified number. This means goodbye to potential miscalculations of overtime.

4. Record keeping

Payroll records, from sole traders through to large multinational organisations, are required to be kept for a minimum of at least six years.

Auditors look at this information and, therefore, it’s important to show what happened and when. Supporting information is particularly important to help provide quick and accurate answers when any payroll errors have been made or there are other discrepancies. Well-kept records is a must for any successful business and failure to keep payroll records can see you fined.

5. Failure to make payroll deadlines

Processing payroll can be a big time commitment. Like many office administration tasks, payroll can seem like it will take no time at all but before you know it, it’s taken hours.

Ensuring you have all employee information prior to payroll (IRD number, tax code/rate through to name, address and bank account), and correctly capturing the hours that your employees have worked, means an easier ride when it’s payroll processing time.

There are many ways that a poorly functioning payroll system is costly for your business – from overpayments to employees through to time commitments. Outsourcing your payroll could give you the ability to focus your time on other areas in your business that need attention.

If you’d like to discuss outsourcing your payroll, or payroll systems and processes, then get in touch with us. We can create a system to work alongside what you have already, or suggest ways of taking the headache out of a poorly functioning system. Give us a call.

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Payroll Doesn’t Have to Be a Headache: How to Simplify & Stay Compliant

1 October 2025

Managing payroll can sometimes feel like navigating a maze; complex regulations, tight deadlines, and countless calculations can easily overwhelm business owners. However, with the right strategies and tools, payroll can be streamlined into a smooth and efficient process. Here’s how you can simplify your payroll process while ensuring full compliance. Embrace Technology Choose the Right Payroll Software Investing in good payroll software is one of the best steps you can take. Look for features that automate calculations, tax submissions, and generate detailed reports. Many software options now offer cloud-based solutions, providing the flexibility to manage payroll anytime and anywhere. Stay Informed on Compliance Know the Laws It’s crucial to stay updated on federal, state, and local labor laws, as these often change. Non-compliance can lead to penalties, so consider subscribing to industry newsletters or updates from trusted legal resources. Record Keeping Maintain meticulous records of employee hours, wages, and payroll taxes. Proper documentation safeguards you from legal troubles and helps resolve any discrepancies promptly. Set a Consistent Payroll Schedule Consistency is key in payroll processing. Choose a payroll frequency that suits your business - whether it’s weekly, bi-weekly, or monthly - and stick to it. This creates predictability for both you and your employees, allowing better financial planning and cash flow management. Automate Tax Calculations Manual tax calculations are prone to errors. Automating tax withholdings through your payroll software ensures accuracy and compliance with the latest tax rates and contributions. This reduces the likelihood of costly mistakes and late penalties. Regularly Audit Your Payroll Process Conduct internal audits periodically to identify errors and inefficiencies in your payroll process. This proactive approach helps catch and remedy issues before they escalate, ensuring your business remains compliant and efficient. Consider Outsourcing If payroll complexities feel overwhelming, consider outsourcing. This allows you to focus on your core business activities while ensuring that payroll is handled by experts who stay abreast of ever-changing regulations and compliance requirements. If payroll continues to be a challenge, our team of experienced accountants is here to help. We offer comprehensive payroll solutions tailored to fit the needs of small and medium businesses, ensuring compliance and efficiency at every step. Contact us today to learn more about how we can support your payroll processing needs.

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What the IRD Expects from You as an Employer

17 September 2025

As an employer, there are several obligations and expectations set by the Inland Revenue Department (IRD) that you must adhere to. Understanding these requirements is essential for maintaining compliance and avoiding any potential penalties. Let's take a closer look at what the IRD expects from you as an employer. Register as an Employer Before you hire your first employee, you are required to register as an employer with the IRD. This is a crucial first step in ensuring that you can meet all tax and payroll obligations. Accurate Record Keeping The IRD requires you to keep accurate and detailed records of all employment-related transactions. This includes: Employee personal details Wages and salary paid Payroll dates and methods PAYE deductions and remittances Details of benefits or allowances provided to employees Maintaining proper records helps ensure that you are reporting and remitting the correct amounts to the IRD. Deduct PAYE Tax You are responsible for deducting PAYE (Pay As You Earn) tax from your employees' pay. This involves calculating the correct amount of PAYE and ensuring it is deducted from each employee's salary or wages before their net pay is provided. Pay Employer Contributions In addition to PAYE, you may also be responsible for contributing to your employees' social security and retirement benefits, depending on the country you operate in. These contributions are typically paid in conjunction with PAYE tax. Issue Statements and Forms At the end of the tax year or upon employment termination, you should provide each employee with a statement showing their total earnings and PAYE deductions. Additionally, filing the appropriate end-of-year PAYE schedules with the IRD is required. File Employer Returns Employers are required to file regular returns with the IRD, which could be monthly, quarterly, or annually, depending on specific regulations. These returns should accurately report all payroll activities, including PAYE deductions. Handle Tax Codes and Changes It's crucial to apply the correct tax codes for each employee's circumstances. Any changes in employment status or tax code must be updated promptly to ensure accurate tax withholdings. Comply with Audit Requests The IRD may audit your business to ensure compliance with employer obligations. As such, being prepared to provide all requested information and records in a timely manner is vital. Adhering to these expectations from the IRD is not just about compliance; it's about fostering a transparent and trustworthy relationship with your employees and the tax authorities. If you need assistance with understanding or managing your obligations as an employer, consider reaching out to a professional accountant. Our team is here to help you navigate these responsibilities seamlessly, ensuring peace of mind and allowing you to focus on growing your business. Feel free to contact us for further information or assistance.