You’d think paying people their wages would be a relatively straightforward process, because all you need to do is to transfer money into their bank accounts or give them a check. In truth, payroll is a more complicated process than it seems. You need to comply with various state and federal regulatory requirements and make sure that you accurately calculate each payroll, keeping the necessary tax and deductions in mind.
Businesses often make mistakes in their payroll, costing them a lot of money and headaches later down the track. Here are some payroll mistakes that businesses must avoid at all costs.
Incorrect Employee Information
One of the most common mistakes businesses make is entering incorrect information when an employee is first hired. You will need to add their personal information, such as their name, address, social security number, etc., into your payroll management system. Misspelled names, addresses, or incorrect digits in their social security number can create a host of problems. In the worst-case scenario, you may be fined by the IRS for incorrect taxes.
Make sure you enter all the information correctly and double check it with the employee’s paperwork.
Make sure you explain the importance of updated records to your employees so they update HR about any material changes in their circumstances. If an employee has a baby, changes homes, etc, you’ll need to update your payroll management system.
Using Paper-Based Systems
If you track invoices and employee hours manually, you’re bound to get into trouble some day. There are several technologies out there that can help you automate the tracking of employee hours. Paperwork is susceptible to being misplaced, torn, or shuffled around. Adopting a digital solution will help you eliminate manual errors that can prove to be costly and will save you a lot of time.
If you’re using manual paper or spreadsheets to schedule employee hours, you’re getting yourself into potential trouble. Creating everything manually creates massive room for error. Get a digital schedule system for your employees to organize the hours and send it directly to their emails, etc. Over or under scheduling hours can lead to a lot of payroll errors and impact employee morale.
Mishandled Payroll Taxes
There are endless payroll tax regulations on the federal and state level, and it’s impossible to know every one of them. Payroll tax errors can come back to haunt you during tax season. Therefore, having a payroll system or even hiring professional accounting services can help you avoid costly mistakes.
A smooth payroll system can elevate your business to new heights. You don’t have to worry about generating payroll, as the system will automatically do it for you. Alternatively, you can enlist the help of an expert such as Ally Books and Taxes to take care of your payroll system.
We provide tax and Payroll Services for Small Businesses. Our cloud-based approach helps businesses access real-time data, which they use to make impactful decisions. Our experts are well-versed in local laws and regulations that will help your organization comply with all legal payroll requirements. Visit our website to learn more about our services, or contact us for more information.