Payroll troubles the straw that breaks small business backs
Doing business may not be all about the money for some but being able to pay staff correctly is imperative.
According to MYOB’S business monitor, a survey of more than 1000 small businesses across Australasia, more than half of Kiwi small businesses have problems managing their payroll.
The main pain points are keeping up with tax and Kiwisaver changes, followed by calculating and tracking leave entitlements, and finally, processing payments.
The finance and primary industries experienced the most difficulty in keeping up with tax and Kiwisaver changes, while construction and trades had the most trouble with processing payments.
In April this year the Ministry of Business, Innovation and Employment (MBIE) Labour Inspectorate confirmed 42 employers had been investigated for payroll-related breaches of the Holidays Act since 2012.
Those payment breaches averaged from $70 to $1800 per worker.
MBIE also revealed it had underpaid its own staff, potentially for up to 10 years, because of an error calculating holiday and shift entitlements.
And let’s not forget the infamous Novopay payroll botch-up, which left thousands of teachers out of pocket and cost taxpayers $45 million to fix.
River City Honey in Whanganui is run by husband and wife Paul and Julie Sergent and specialises in bulkproducing manuka honey.
The company has a fluctuating payroll, with anywhere between eight and 10 employees on the system who work irregular hours.
Julie says they use a cloud accounting package and also an accountant to avoid all the complexities of pay and keeping up with legislative change.
Experiences like that of River City Honey are common in the primary sector, which, along with transport and construction, is one of the industries least likely to have in-house payroll help or guidance.
As evidenced by high-profile payroll botch-ups, mistakes can be incredibly costly and for small businesses, it is not a cost they can afford.
MYOB New Zealand general manager James Scollay says the multitude of factors involved with payroll make it complicated and are the reason why some industries struggle more than others.
These include variable hours, Kiwisaver, sick pay and holiday pay.
The primary industry, for example, includes smaller operations so they have less of a need for in-house payroll experience, but they employ people who may work as casuals, which can cause problems, Scollay says.
Online payroll solutions make calculating pay and entitlements much easier through automation and business owners do not have to worry about compliance or regulatory changes.
‘‘It’s important that small business owners get good advice about their obligations and what system is best for them,’’ Scollay says.
The finance and primary industries experienced the most difficulty in keeping up with tax and Kiwisaver changes, while construction and trades had the most trouble with processing payments.