Common Payroll Errors
Common Payroll Errors
Payroll is a complicated department to be in. We are trained payroll experts, so if we say that it can be complicated, you can trust that we know what we are talking about. Because it can be such a complicated ordeal, there are a number of errors that are commonly made. Studies show that about 40% of small businesses get fined by the IRS because of common payroll errors involving taxes. With so many small businesses popping up across America, you can imagine just how many are getting fined for this. What are these errors people are making and how can you avoid them?
Deadlines: Timing is an extremely important part of payroll. This goes beyond making sure your employees are paid on time. You have to make sure you file the right paperwork and tax information before the deadline and send important documents to employees. These documents include W-2s and 1099s.
Misclassification: There are several types of employees. There is part time and full time, wage and salary, permanent and temporary, payroll and contract. You have to make sure you properly label each employee and handle their payroll needs accordingly.
Poor Book Keeping: There are a lot of numbers involved in Payroll. It isn’t uncommon that names and social security numbers get mixed up with each other. While this might seem like a small mistake to make, it is one that can be costly in fines and consequences.
Overtime: Overtime is a part of payroll yet has its own list of rules to follow. Different types of employees have different rules for overtime. Wage workers get overtime if they work more than 40 hours, yet salary workers only get overtime if they make less than a certain amount a year. Contract workers don’t qualify as employees so they don’t get overtime pay.
No Back-Up: Payroll doesn’t get to take a break. If you have someone in-house doing payroll and they need to take a sick leave, your other employees still need to be paid and the IRS still needs its paperwork. It is important to have someone capable of doing payroll if the main person is out, and you need a way to always have access to payroll in a case of any technical issues. If your computer goes down, it is good to have either paper printed backups or backups on some form of storage device.
These errors tend to pop up because Payroll never really stops. As a business grows it will gain new employees, lose employees, and change current employee’s payroll status. Employees will get raises, paid holidays and vacation days, take sick leave, all things that need to be handled and recorded. It is a lot to worry about, luckily though there is an easy solution. Simply don’t worry about it at all. That might sound counter-productive, but what we mean is you can outsource your payroll to a company trained in every aspect of payroll management. You get all of the benefits that an in-house payroll department offers without any of the stress. If you are ready to get rid of errors in your company’s payroll, contact Vision H.R. today.
