A small or medium-sized business owners know that running payroll operations in-house can be more trouble than its worth. Making a mistake on an employee’s pay or failing to get payroll done on time could mean losing employees trust or your employees. You could also risk some costly errors with the IRS for payroll-related penalties.
So, how do you avoid making errors with your payroll? You need to know the common payroll mistakes and how you can prevent them.
If you haven’t correctly set up your payroll operation system, it won’t matter how careful you are calculating and entering your employees wages or whether payroll is done right and on time each pay period. Your business needs to be registered and your federal, state, and local tax withholding correctly. Employees need to be appropriately classified, and you can get into trouble with the IRS if you have misrepresented the incorrect amount from your employee’s income taxes, Medicare, and Social Security.
When you’ve correctly figured out the proper amount of withholding taxes to be taken from your employees and your business, you need to know where to deposit the money. You need to know when, how often, and what forms need to be used for filing your tax deposits. If you fail to file your tax deposits, correct, you will be penalized for it.
Are you forgetting to record things in your payroll processing system, such as giving your employees gift cards instead of cash bonuses, or writing a payday advance for an employee? This can cause issues with balancing your books, if you’ve forgotten to record this information.
If you rush to provide your payroll calculations, you might end up paying an employee too much to too little, and it will throw your books off, and possibly upset your employee. But you cannot submit your payroll late, or you will have agitated employees. If you lose your employees, trust it’s tough to get it back, but also failing to do your payroll on time might mean late tax deposits and tax penalties.
Your state unemployment rates change over time and if you get a new rate from your state agency. IF you forget to change your payroll system, your filing will end up misinterpreted, and you will get fined for the mistake.
There is a way to avoid payroll mistakes, such as outsourcing your payroll needs to a PEO, known as a professional employer organization. Looking at parenting with a PEO for your payroll services can save yourself and your business from wasted time, mistakes, and costly penalties.
Outsourcing your payroll needs to a PEO company is cheaper than hiring someone to be a dedicated HR person in your business, and you also do not have to worry about losing the employee to another company, leave or illness.
By outsourcing your payroll service, you also don’t need to worry about incurring tax penalties, or any other fines. You can trust your payroll in the hands of HR specialists, who know the tax and employment laws, and are up to date on rules and regulations.
Along with payroll services, if you partner with a PEO company, you also can offer your employees benefits, such as direct deposits. Pays that are deposited on time every pay period, and there will not be any mistakes.
Many small businesses find themselves making mistakes in payroll, which leads to expensive tax penalties each year. If you want to avoid making errors with pay, then consider partnering with a PEO. Find the top PEO companies on Retireat21.com.