Being a small business owner can be tough. Sometimes, you may feel like you’re always fighting fires. One of the most common fires is payroll mistakes.
Doing right by your employees is a no-brainer. You want to treat them fairly. You want to give them a reasonable wage and give them the proper hours they worked.
It seems simple, but it’s not uncommon for small- and medium-sized business owners to make major payroll mistakes. Indeed, payroll mistakes may be costly and get you into trouble with the government (and with irate employees).
Should you make payroll mistakes, take responsibility. Correct them. Don’t repeat the mistakes.
Keep reading to learn about the most common payroll mistakes that you should avoid like the plague.
Table of Contents
Always Review Your Employee Information
One of the most common payroll mistakes is failing to review employee information regularly. This can lead to overpaying or underpaying employees, as well as issuing incorrect payments.
To avoid these mistakes in any type of business, always review your employee information before processing payroll. This includes ensuring that their contact information is up-to-date and that their job title and salary are accurate. You should also verify that any deductions or benefits are still accurate.
As a small business over, you should look into investing in time clocks to stay on top of the hours your employees work for better accuracy. Reading this article will let you know why that’s a good decision.
Understand Federal and State Withholding Taxes
Most payroll mistakes are made because of a lack of understanding of the federal and state withholding taxes. These taxes are important because they are used to fund government programs that benefit all citizens. Withholding taxes are also used to ensure that taxpayers do not owe money at the end of the year.
To avoid making a mistake, it is important to understand how these taxes work. The best way to do this is to speak with a tax professional or use a tax software program.
Understand and Correctly Apply the Rules for Overtime Pay
There are a few key things to keep in mind when it comes to overtime pay to avoid the most common payroll mistakes. First, you need to make sure that you understand the rules for overtime pay and how they apply to your employees. Second, you need to be sure that you are correctly calculating the overtime pay for each employee.
Finally, you need to be sure that you are paying the overtime pay to the employees on time. By following these simple tips, you can avoid the most common payroll mistakes and ensure that your employees are getting the overtime pay they deserve.
Avoiding Direct Deposit
A common payroll mistake that employers make is failing to properly set up direct deposits for their employees. This can result in employees not getting their pay on time, or possibly not getting paid at all. To avoid this mistake, be sure to set up a direct deposit with your payroll provider well in advance of your first payroll run.
Don’t Make These Payroll Mistakes
If you want to avoid the most common payroll mistakes, make sure to educate yourself on the basics of payroll. You should also have a reliable payroll system in place. Finally, be sure to review your payroll records regularly. By following these tips, you can avoid costly payroll mistakes.
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