Don't Make These Mistakes When Handling Payroll
Posted on: 22 June 2021
Payroll is one of the most expensive aspects of running a business and is also an aspect of your business that can become even more expensive if you make a mistake. However, it is easier to avoid making these mistakes if you are working closely with a payroll service.
Don't Misclassify Your Employees
A payroll service can not only handle payroll processing but can also make sure that your employees are always classified properly. You will not want to misclassify your employees as independent contractors, for example, unless you actually intended to hire independent contractors. You may end up missing out on tax dollars.
A common problem is poor recordkeeping. For example, a lot of money can be wasted each year if your company misclassifies employees or will match an employee to the wrong Social Security number. Oftentimes, poor recordkeeping results from a company not having the time or resources to engage in adequate recordkeeping. An automated payroll system can also ensure that 1099s are always sent out.
Don't Miss Deadlines
Tax information needs to be reported on time, or you may be fined or face other consequences. By outsourcing much of your accounting, you will be able to avoid this problem.
One of the main advantages of a payroll service is that the work will be outsourced to a third party so that your employees receive their payments as soon as possible. This can help you avoid having disgruntled workers and can reduce turnover. Also, your state might have pay frequency requirements you must follow.
Don't Underpay Employees
Failing to pay employees what they are owed will not only lead to disgruntled workers but may also lead to an employee making a legal claim against you. This may force you into an expensive legal battle if you do not address the issue as soon as possible. A common reason why employees are underpaid is that they are owed overtime or a holiday bonus. This can be difficult to keep track of without payroll services.
Also, payroll services will allow you to avoid a situation where an employee mistakenly expects a higher payment. The payroll services will have all the documentation necessary to prove that the employee was given an appropriate payment.
Don't Forget Important Deductions
You may need to deduct child support or wage garnishments from the payroll. Failing to do this can lead to penalties, and it is harder to correct the problem after you make the mistake.
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