{"id":41037,"date":"2025-08-18T16:14:00","date_gmt":"2025-08-18T16:14:00","guid":{"rendered":"https:\/\/www.simplybusiness.co.uk\/?post_type=knowledge&p=41037"},"modified":"2025-08-18T16:15:39","modified_gmt":"2025-08-18T16:15:39","slug":"common-payroll-errors-small-businesses","status":"publish","type":"knowledge","link":"https:\/\/www.simplybusiness.co.uk\/knowledge\/staff\/common-payroll-errors-small-businesses\/","title":{"rendered":"Revealed: 84% of small business owners make payroll errors"},"content":{"rendered":"\n

Are ever-changing tax regulations making the process too complicated for the average small business owner? New data from payroll software Employment Hero suggests this is the case \u2013 with 84 per cent of small business owners revealing they\u2019ve made errors on their payroll<\/strong>.<\/p>\n\n\n\n

The survey of 1,000 small business owners also reveals that almost half (40 per cent) have received penalties for these payroll issues.<\/p>\n\n\n\n

The most common payroll errors made by small business owners include:<\/p>\n\n\n\n

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48%<\/strong><\/p>\n<\/div><\/div>\n\n\n\n

Calculating wages incorrectly<\/p>\n<\/div>\n\n\n\n

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38%<\/strong><\/p>\n<\/div><\/div>\n\n\n\n

Late\/missing payments<\/p>\n<\/div>\n\n\n\n

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36%<\/strong><\/p>\n<\/div><\/div>\n\n\n\n

Calculating correct hours<\/p>\n<\/div>\n<\/div>\n\n\n\n

\u2018A compliance minefield\u2019<\/h2>\n\n\n\n

With recent updates to the national minimum wage<\/a>, as well as increased National Insurance contributions<\/a>, it\u2019s no wonder that small business owners are making errors in their payroll reporting.<\/p>\n\n\n\n

Employment Hero UK managing director Kevin Fitzgerald says: \u201cWith the rising national minimum wage, increased National Insurance contributions, and tougher enforcement of employment law, there\u2019s never been a more complicated time to be a small employer.  <\/p>\n\n\n\n

\u201cOur research shows payroll has become a compliance minefield. SMEs are trying to do the right thing, but outdated systems and limited resources are costing them dearly.\u201d<\/p>\n\n\n\n

SMEs still rely on outdated payroll processes<\/h2>\n\n\n\n

For many, the problem seems to come from how small business owners are managing their payroll \u2013 with 70 per cent of small business owners revealing they\u2019re worried about keeping up with changing payroll technology.<\/p>\n\n\n\n

The data also reveals that 31 per cent of small business owners still rely on spreadsheets to calculate wages \u2013 which rises to 44 per cent for those with fewer than 20 employees.<\/p>\n\n\n\n

Read more:<\/strong> Best payroll software for small businesses in the UK<\/a><\/p>\n\n\n\n

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HMRC launches new PAYE service<\/h2>\n\n\n\n

Data from the latest Simply Business 2025 SME Insights Report<\/a> supports these findings \u2013 with 27 per cent of small business owners revealing they want the tax system simplified.<\/p>\n\n\n\n

Fortunately, HMRC has recently announced many changes set to simplify the tax process as part of their transformation roadmap<\/a>. July saw the government launch a new PAYE service<\/a> to simplify the tax system for 35 million people, allowing users to check and update their income, allowances, reliefs, and expenses.<\/p>\n\n\n\n

JP Marks, HMRC\u2019s Chief Executive and First Permanent Secretary, says: \u201cThe government\u2019s ambition is for a simpler tax and customs system and this roadmap sets out how HMRC will deliver a first-class experience that feels different to their customers.<\/p>\n\n\n\n

\u201cBy 2030, UK citizens will experience a tax administration system that is more automated, more focused on self-service, and better set up to get things right first time so they can fulfil their tax obligations.\u201d<\/p>\n\n\n\n

More staff and payroll guides<\/h3>\n\n\n\n