Managing payroll is a complex job. It can be hard to show perfection in this. So, how do you avoid common payroll mistakes? This is how!
Step by Step Guide
1: Misclassifying Employees
Various penalties can be incurred because of misclassifying employees, ranging from myriad fines all the way to struggling with the legal system. Another critical concern is whether an employee is a regular employee or an independent contractor. Workers normally have withholdings for tax while contractors must be responsible for themselves.
To avoid misclassification, carefully review the nature of the work relationship. If the individual works set hours, uses company equipment, and follows company protocols, they’re likely an employee. Conversely, contractors usually have more autonomy over their work.
2: Failing to Keep Up-to-date Records
As a result, having a correct and timely record-keeping system is paramount in payroll management. Not keeping the tools up to date can lead to the accumulation of errors that eventually can be the root of bigger and more complex issues soon. Maintain organized accounts of the actual hours worked by the employees, their earned wages, and any deductions or benefits that apply.
Incorporate robust salary software that helps keep records and cuts down on the likelihood of miscounting through simple duplication of these processes. Invocation of employee information on a regular basis, as well as updates, is done frequently to guarantee accuracy and compliance with the regulations.
3: Neglecting to Submit Payroll Taxes
Non-submission of tax payments in the proper and timely period may attract heavy penalties from the tax authorities. Ensure you are familiar with how taxes affect you at the federal, state, and local levels. Establish a reminder system and/or look for payroll software that will facilitate and circulate the process to prevent last-minute rush-ups.
Compare the company’s payment journal with the tax filing regularly to spot any inconsistencies immediately. Payroll tax responsibilities are taxing. Let a professional service provider take over your payroll tax in a more comfortable mood.
4: Inaccurate Time Tracking
Accurate time tracking is essential for calculating employee wages correctly. Manual timekeeping methods are prone to errors and can lead to discrepancies in payroll calculations. Furthermore, implement a reliable time-tracking system that integrates seamlessly with your payroll software.
Train employees on how to use the time tracking system effectively and encourage them to report any discrepancies promptly. Regularly audit timekeeping records to identify and address inaccuracies before they impact payroll processing.
5: Attempting to Handle Payroll In-house Without Expertise
While managing payroll in-house may seem cost-effective, it can be a risky endeavour without the necessary expertise. Payroll processing involves complex calculations, tax regulations, and compliance requirements that professionals best handle.
Consider outsourcing payroll services to reputable providers with expertise in payroll management. Outsourcing saves time. In addition, it also saves resources. Moreover, it ensures accuracy and compliance with legal requirements.
Get in Touch with Faith Accounting Inc.
If you want to achieve perfection when it comes to payrolls, give a call to Faith Accounting Inc. We are one of the most reliable companies out there. We stand ready to help. Give us a chance today.
