If you run a small business, you know how important it is to meet the tax and financial obligations. You want to make sure you never miss an important deadline. You also want to make sure that you don’t make any mistakes with your financial obligations.
Among the most common mistakes that employers are mistakes for payroll. Payroll is one of the most important aspects of running a business. Making mistakes can cause huge issues for your business and for your employees.
So what are the common mistakes for payroll that you need to avoid? We’ve prepared this guide just for you!
1. Provide Accurate Records
As an employer, it’s your obligation to provide your employees with an accurate record of their earnings. This comes in the form of paycheck stubs.
These are records of how much your employee has earned during a specified pay period. It will also show how much tax was deducted from their paycheck. Your employee will depend on these records for filing their tax returns.
You will also need to refer to these records at the beginning of each year when you provide W-2 forms for your employees.
2. Paying on Time
You want to make sure that you always pay your employees on time. Avoiding late payments are of the utmost importance.
For example, if there is a bank holiday coming up on a payroll day, you want to make sure that payroll is done a day earlier. If payroll isn’t processed on time, your employees won’t get their pay on time—and they depend on you.
You want to make sure that your payroll department or office accountant provides a written confirmation to verify payroll processing. You should also make sure that they know the deadlines for payroll.
You also need to make sure that you pay on a consistent basis. Some states have strict laws as to how often employees need to get paid. Make sure you pick a regular schedule (weekly, biweekly, etc.) and never miss it!
3. Payroll Taxes
You must ensure that you are paying your payroll taxes on time. These are collected on a pay-as-you-go basis. Payroll taxes include federal, state, and local taxes.
Failure to comply with payroll taxes might result in fines from the IRS. You should check with your payroll department that they are meeting the tax obligations. As with payroll processing, ask them to provide a written confirmation when they’ve paid the taxes.
4. Pay for Training
This is often overlooked by many companies. You are obligated to pay your employees for training and any part of the onboarding process.
The only time you don’t have to pay them is if they are attending a voluntary seminar, workshop, etc. outside of normal work hours. You also need to know the rules for employees and contractors — as the latter might not have to receive compensation for training. It’s best to consult with your business accountant or attorney.
5. Protecting Your Records
This is an admin error that can have serious ramifications for your business. Even after an employee leaves your company, you should always keep records of their payment. This might be necessary if there’s ever any legal action taken against your company.
Therefore, it’s imperative that you organize all payroll records properly. You should also have a digital backup of records and keep them backed up on external hard drives. You should also keep another copy on a cloud storage server —and share these records with your employee.
Don’t Make These Mistakes for Payroll
Now that you know the common mistakes for payroll, you can ensure you won’t make any of these errors. Make sure to share this with your fellow entrepreneurs.
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