7 Payroll Mistakes to Avoid | Payroll Processing

7 Payroll Mistakes to Avoid

Your business is growing. But learning how to pay employees correctly can be a little overwhelming. What Forms need to be filed or which taxes need to be collected and paid? As you probably know, Payroll involves more than just writing checks to employees.

Here are 7 common mistakes to avoid.

#1 is Employment Taxes. Miscalculating federal and state taxes or missing payroll tax deposits and filing deadlines can result in large penalties.

#2 is improper calculations for overtime payments. Not all states are the same. Some require that Overtime start when an employee reaches 40hrs a week and others when they work more than 8 hours in one day. Check with your state department of labor website to make sure you are calculating payrolll amounts correctly.

#3 is Failure to process Garnishments, Levies or Child Support Payments with payroll. This is an important one because failure to properly and timely process the wage garnishment can result in the responsibility of the employer to pay the judgment.

#4 has to do with Poor Payroll Record Keeping and Data Collection. Having a clear time keeping system where the employee signs off on their time either electronically or manually can not only help protect you against potential wage claims brought by a disgruntled employee.

#5 involves Payroll tax rate changes. Rates change, especially unemployment tax rates. Pay attention to all notices received and be sure to change your calculations accordingly

#6 is incorrectly classifying workers as W2 Employees verse 1099 independent contractors when processing payroll. Remember, this is governed by state regulations, not by the company or worker.

#7 is tracking paid time off. Estimates say that nearly every worker will take at least three paid time off days that aren't tracked by their employer when payroll is run. This can add up quickly, so tracking hours earned and taken can potentially save you thousands of dollars a year.

How can you ensure you stay compliant while processing payroll? Many accountants will recommend using a professional payroll company. We tend to agree. Here’s why. Payroll companies stay on top of federal, state and local tax changes, file your tax payments, track vacation time, calculate OT and even take care of paying garnishments.

[michelegomez]

This was an excellent video for all business small, Med or Large but note the Payroll Company may also have Time and Attendance or HR to help you even more. We do at Nevada Financial Concepts, Inc. "Your Local Payroll Company since 1985"