Finance

How Payroll Mistakes Can Cost Your Business

Payroll can of course, be tackled in house or by business owners and managers themselves, but this is usually a recipe for disaster, and is not recommended unless the individual or team have specific knowledge of tax laws and other requirements of payroll.

Time consuming and often complex, payroll can be a game changer for some businesses, with failure to accurately process payroll leading to employee dissatisfaction and potential penalties for tax errors.

Here are a few payroll mistakes that are easy to make, and harder to correct:  

  • Not getting to grips with complicated tax laws

Businesses large and small are required by law to submit their taxes to federal, state and local authorities, at specific times of the year, and using the correct forms to do so. With tax laws ever changing, it’s imperative that payroll reflects any changes and conforms to all laws to avoid incurring costly penalties and fines.

  • Submitting incorrect and inaccurate amounts

A simple mistake to make if processes aren’t followed to the letter, and records are not being meticulously kept, but one which can result in big problems for businesses and employees alike.

  • Incorrectly classifying employees

Again, easy to do but something that can have disastrous consequences for everybody involved.

  • Paying the wrong amount and at the wrong time

This needs no explanation really, since the consequences of not paying an individual the correct amount for the hours they’ve worked, or paying them on time, are self-explanatory. However, it’s important to remember that these mistakes when made once, may be easy enough to rectify without losing the confidence and respect of employees, but such mistakes made repeatedly or to multiple employees, is not so easy to get over.

  • Depositing and reporting employment taxes incorrectly

Any mistakes made in relation to taxes, can end up proving costly for a company, and should naturally be avoided wherever possible.

The hidden costs of not seeking professional help with payroll:

Time is one of the most important things to a business owner, and any hours spent slaving over records and data that could be devoted to other, more relevant aspects of the business, is potentially time wasted. While of course it isn’t a waste of time to be able to pay your employees accurately and on time, it’s a role that can easily be fulfilled by outsourcing, whether other elements of your business should only be handled by the owner or manager themselves.

Also, if mistakes are made in payroll, they can be costly to fix, so while you will not be able to outsource payroll for free, paying a company to handle your payroll would likely save you money in the long run, since they are unlikely to make mistakes.

Why outsourcing payroll is a smart move:

In short, all the pitfalls and potential problems mentioned above can be avoided by simply outsourcing payroll, and with the avoidance of costly errors, they will be worth every cent that you pay them.

For help with your company’s payroll, seek professional help from a payroll service provider today and help keep your employees satisfied, not to mention the IRS!