Business owners know that mistakes when settling payroll can create great hassle for the them, lead to unhappiness of the employees, and reduced productivity in the long run. This is why it is good to learn the basics of payroll and be well-versed in labor laws when you are thinking of hiring more workers for your business. Below are some of the most common payroll processing mistakes and how to avoid them. If you are looking for seamless payroll processing and other accounting solutions, you can choose to use QuickBooks for one-stop bookkeeping solutions and payroll add-ons.
Setting Up Payroll Wrongly
Some business owners tend to forget that they need to account for taxes when they are dealing with all the aspects of payroll. It is also important to ensure that you are withholding the correct amount of taxes from your workers’ salaries and also possess the knowledge of how much you have to pay. You can choose to use payroll services or learn about payroll by reading up online about local labor laws.
In the United States we have the FLSA (Fair Labor Standards Act) which mandates that employers need to pay a higher rate for overtime hours. However, calculating these hours might not be that straightforward because employers also need to adhere to the state, local and federal wage hour laws if they are created to protect the employees. For example, in California, there is daily overtime that is 1.5 times the normal wage rate, and double time that is twice the normal pro-rated salary. You can check in with the Department of Labor to find out about the wage laws that govern all the different states.
Losing Important Records
Regardless of the size of your business, auditing is equally hated. This is the reason why keeping the payroll records is important in helping you overcome it. Employers are required to keep their payroll records till the past three years of running the business. As always, some state laws might need businesses to keep this information for an even longer period of time, so checking with your state labor office will help to give you some insight on what to do. You can also ask them the type of documents that you will need to keep because this can also vary state to state. However, it is normal for auditors to ask for standard documents like timesheets, tax forms and W-4s.
Paying Employees Late
Everyone knows that small business owners have their hands full most of the time. However, it is important to ensure that your employees are always paid on time. If you forget to process payroll, it could result in unhappy employees which are bad for business and can lead to the downfall of your company. Handling payroll in a rush can also lead to mistakes that include overpaying and underpaying. There is a sort of false economy of getting through this process quick because the chances are that you will have to make up for the mistakes by putting in even more time and effort to fix them. You might even have to fork out money for fines that are so unnecessary. However, you do not need to worry because you can always employ a good payroll service to let you know the deadlines that are coming up and the potential mistakes you might make.