Common Payroll Mistakes
November 16, 2015
The success of any small business can be dependent on how well its payroll system operates; discontent and low morale among staff due to payment issues could quickly result in a decrease in the success of your company. So how exactly do you ensure that your staff is being paid correctly?
Ensure that your payroll system is legally sound and set up correctly
Payroll is covered by complicated tax laws, no matter where you are in the world, and penalties for non compliance can be costly, especially if an audit has to be performed.
Your business must be registered and employees need to be classified correctly for the accurate calculation of wages.
Don't assume that outsourcing your payroll is an unnecessary expense
As mentioned, tax laws can be complex and confusing, and if you find yourself struggling to keep abreast of strict government regulations, you might want to consider hiring a payroll service provider. It might seem like an added expense that you can't afford, but the benefits of hiring a professional often prove its worth financially and gives you peace of mind. Your staff will receive their correct wages on time, and the IRS won't be delving into your business accounts.
Remember to record manual checks
When finding themselves short of time, some small business owners will issue manual checks to their staff (such as bonuses and advances), but forget to record them in the payroll system. This small error then leaves them miscalculating their tax deposits and struggling to balance their books.
Ensure that deposits are submitted correctly and on time
When tax funds have been taken from employees and tax funds have been contributed from the business, you will need to find out how and when they should be deposited. Depending on your business’s tax liabilities, there will be different rules about how often and by which method, you should use to deposit funds.
Keep your State Unemployment Insurance (SUI) rate up to date
As a small business owner, you may receive a new SUI rate from your local agency. Forgetting to add it to your payroll system, will mean that your files will be incorrect and you may incur costly penalties.
Make sure that payroll is run on time
If time is of the essence and you're in a hurry to get your staff paid on time, you may well over, or underpay them as a result of not having the time to check your calculations. You may even find yourself so swamped with other duties that you fail to run payroll altogether. Of course this could lead to discontent among your employees and you will need to spend time regaining their trust in you as their employer.
All small business owners want to avoid costly penalties due to poorly managed payroll systems, so ensure that you do adequate research, adhere to the rules and don't discount hiring a professional payroll service, especially if it means that your workforce will be content.