5 Payroll Mistakes That Could Affect Your Business
August 2, 2017
As the owner of a business, it is your responsibility to make sure that payroll runs smoothly and efficiently, for your sake, that of your business and of course, your employees.
Making mistakes in payroll can easily result in costly fines and penalties, and your employees will quickly begin to lose trust in you if their pay is mismanaged, and they do not receive what they are entitled to in a timely manner. To keep your business running smoothly, try to ensure that you don’t make any of the following five payroll mistakes:
- Classifying your staff incorrectly: There have been many recent changes in legislation with regards to independent contractors, many of whom are now classed as employees. Ensuring that your workers are classified correctly on your payroll system, will help prevent you from incurring huge penalties that could massively affect your business. Reviewing your employee contracts every month can help to avoid this, and keeping up to date with IRS classification rules is also wise. Hiring the services of a professional payroll company will help you to keep on top of law changes and help ensure that your payroll correctly classifies each employee.
- Not filing the appropriate paperwork at the right time: It can be hard for business owners to stay on top of paperwork, but when it comes to filing employee forms and paperwork associated with payroll, they must be submitted in a timely manner. Employee records should be up to date and made available for inspection, whenever required. A payroll service provider can help you with this, or you may need to purchase some office supplies that can help with organising paperwork.
- Not withholding local taxes: We all know that there are state and federal taxes, but in some areas of the country there are municipal or county taxes to be withheld, too. Setting up tax withholdings incorrectly can result in your employees being penalised, and that is never good for any business! Thoroughly research the taxes that need to be withheld, or employ the services of payroll professionals, who will take care of that for you.
- Incorrectly calculating wage garnishments: Depending on each employees’ garnishments, there will be different calculations to be made and/or different interest depending on eligible compensation, bonuses and commissions. Getting the garnishment calculations wrong can set your business back.
- Not including all relevant details on pay checks: Pay checks should clearly show all deductions and how each employees net pay was calculated. There are some types of accounting software that can help you with this, and payroll professionals will also be able to advise you on what details each pay check should display.
The simplest way of ensuring that you don’t make any mistakes with your businesses payroll, is to hire the services ofa payroll professional. They will advise you on every aspect of payroll and not only help you to be compliant with state, federal and local tax laws, but help you to keep your employees satisfied and paid correctly, too.