Payroll Matters: 5 Common Payroll Mistakes and How to Avoid Making Them
The IRS estimates 40 percent of small businesses pay tax penalties because of payroll each year. What could you do with the money you save by avoiding those penalties?
The majority of employees also say they’ll start job hunting if there are issues with payroll.
It should be clear that payroll matters, to both you and your employees. Unfortunately, payroll mistakes are more common than you’d like to think.
There is good news, though. You can avoid these five common payroll errors.
- On-Time Payroll Matters
The most common business payroll mistake is simply not remitting your taxes on time.
This is very common for small businesses, whose owners may be wearing many hats. You might be the chief marketer as well as the bookkeeper and payroll administrator. You may leave payroll to the last minute, or you may get busy with other tasks.
The IRS levies most of their penalties for late remittances.
- Miscalculating Overtime is a Big Misstep
Your employees probably won’t be too concerned if you don’t file your payroll taxes on time. They will be more concerned if there are issues with their paycheck.
There are plenty of ins and outs when it comes to how to do payroll. What should be straightforward may actually be far more complex. Overtime pay is a good example of that, and it’s an area where plenty of employers make missteps.
Make sure you understand what’s required of you, and calculate overtime according to the law.
- Worker Misclassification Could Cost You
States and the IRS are looking to crack down on worker misclassification.
Many employers aren’t aware of the differences between employees and contractors. You may believe you’ve hired a contractor, but the worker and the IRS may disagree. The payroll mistakes law here suggests you could be on the hook for unpaid benefits.
Make sure you know the differences between contractors and employees before you hire.
- Mishandling Garnishment, Levies, and More
Do you have an employee who has been court-ordered to pay child support? Some employees may need to pay levies or garnishments to third parties.
If this is the case, then it’s on you to manage payroll correctly for these employees. If you don’t deduct the proper amounts, you could find yourself in a predicament that’s difficult to correct.
- Poor Record-Keeping
Do you keep canceled checks and timesheets? If you’re not keeping these documents on hand, you could find yourself in a boatload of trouble.
Keeping good records is important if you ever happen to be audited by the IRS. The experts at www.paystubcreator.net note paystubs aren’t always required by law, but they’re excellent records to have on hand.
They’re also useful if an employee should ever dispute what they’ve been paid or question what you withheld in taxes.
Good Payroll Pays Off
It’s no secret that payroll matters, and doing it the right way matters even more. Avoiding these payroll mistakes will help you save money and keep your valued team members.
Looking for more great business advice? You’re in the right place. Check out the latest articles for more insight into growing your business.