People tend to make very common payroll mistakes. Making a mistake on payroll means an error on an employee’s paycheck or tax payment. Everyone makes mistakes, but it can be very frustrating when it comes to payroll issues. When you are responsible for payroll, you are accountable to employees and any regulators. By not providing the correct information can impact employees’ livelihoods.
The reasons companies go into business is to make money, but don’t often understand the administrative processes, including handling payroll. Payroll processing is a complex task, take into account the financial and legal implications. Deviations in taxes, employee regulations, and compliance issues make payroll time-consuming. Here are some common payroll mistakes that people can make.
5 Common Payroll Mistakes and How to Avoid Them
Payroll managers have to be compliant, accurate, have proper payroll systems, up to date safety and security, and know tax-related matters. It’s essential to have a reliable payroll processing and tax compliance plan in place to avoid potential payroll errors and fees. Below are five common payroll mistakes and how to avoid them:
1) Not Being Up to Date on New Payroll Rules and Regulations
There are 3 things that are constantly changing in payroll:
It is essential to keep up to date with new laws that are passed to ensure your business is sustaining compliance. If a new law is missed, you lose valuable time trying to adjust any payments you have made using the previous statutes and rules. Create a calendar that reminds you to check for updates on any new laws, rules, and regulations. This can help you avoid making mistakes in this area.
2) Failure to Devote to a Consistent Payment Schedule
Consistency is key in payroll, especially since payments should be consistent when dealing with any business. Whether your company is new or established, it is essential to have a consistent payment schedule for employees.
The most generic payment schedules tend to be:
However, there are often times that businesses pay their employees semi-monthly or monthly. Either way you choose to pay your employees, be consistent. No one likes to miss a payment, especially if someone else is the cause for the mistake.
3) Absence of Solid Planning
A company needs a solid plan in place, managing payroll. A project is the key to ensure employees are paid on time and avoid potential errors and fees. You need to keep track of paydays that fall on holidays and issues tax forms.
4) Miscalculating Payroll
A complex aspect of a payroll manager’s duties is calculating payroll taxes. Miscalculating anything on payroll could be very costly. It is crucial to accurately calculate net pay versus gross pay for employees to avoid paying unnecessary fees to tax agencies.
5) Missing a Garnishment Request
As soon as a payroll manager receives a garnishment request, they need to place a copy in the employee’s folder and add it to their calendar, this will ensure the appropriate deductions are made from each payment.
Guard Yourself from Payroll Mistakes
An easy way to protect your business from payroll mistakes is by hiring a professional service to oversee this area if you do not have an employee on staff to handle payroll. Outsourcing can save time, including an hour spent wondering and worrying if the payment was made correctly.
Another benefit of outsourcing payroll service is not having to incur tax penalties. Payroll professionals will know the tax and employment laws, and the new legislation and employment law compliance.
Common payroll mistakes happen and can be costly and result in fines. However, with the correct tools in place, you can improve your payroll management skills and grow your businesses bottom line.
Just remember to apply the latest laws and regulations, don’t put too much reliance on payroll software, process wage garnishments correctly, don’t miss a deposit deadline, classify non-exempt employees correctly, don’t treat employees as contract workers, and ensure social security numbers are correct.
AUTHOR LaTia Longuemire
My name is LaTia Longuemire. I enjoy writing, singing, and cooking in my spare time. My passion is helping others. At this stage in my lifetime, I'm primarily focused on my children. They are everything that keeps my world spinning.