Small business owners have been looking more and more into outsourced payroll solutions to automate what can be a cumbersome process—paying your employees and filing payroll taxes.
Payroll is a core part of what makes your business function, how you build trust with employees, and how you manage the often complex tax requirements involved with running a business. With a payroll solution in place, you have a lot less to worry about when it comes to mistakes paying employees, filing forms, and meeting all your tax requirements.
As a small business owner, small mistakes can come with big costs. Most startups and small businesses can’t afford unnecessary fees or expenses. Every dollar has to go to growing and strengthening the business’s balance sheet.
Here are the Top 5 Payroll Mistakes to Avoid:
1. Misclassifying workers.
With the number of independent contractors on the rise, it’s easy to make mistakes with worker classification…
But an employee is an employee and a contractor is a contractor. It’s your job to know the difference between the two, as this will have a big impact on your payroll process.
The IRS shares a variety of information on this topic. You can learn more by visiting their site.
2. Missing deadlines.
Just like with your personal taxes, there are payroll deadlines you need to mark on your calendar.
It’s a must that you report and deposit payroll taxes, both on the federal and state level, by their due date. This might be a concern if you file your own payroll taxes, but companies that hire a professional service don’t get automatic reminders.
Missing a deadline can cost you money in both penalties and interest.
3. Poor record-keeping.
Even if you hire a professional payroll company, you should never overlook the importance of implementing your own record-keeping system.
This means something different to every company, but here’s a tip: it’s better to be safe than sorry.
If you think you need to save something, you should probably do so for the time being. When it comes to payroll records, hold onto things like:
- Time sheets
- Cancelled checks
- Tax forms
- Proof of past payments
Poor record-keeping has sunk many companies over the years. Take the steps necessary to prevent trouble in this area of your business.
4. Messing up employee details.
It might not sound like a big deal, but it’s important that all information regarding your workers is 100% accurate.
It never hurts to double-check information like:
- Full name
- Current address
- Social security number
- Start date
- Termination date (if applicable)
- Date of birth
- Payroll details, including hourly rate, overtime, etc.
Remember, it only takes one inaccuracy to cause a major payroll headache.
5. Mistakes when filling out forms.
When it comes to payroll, you can say one thing for sure: there’s no shortage of forms.
Any mistake, no matter how big or small, could result in overpaying or underpaying payroll taxes. And sadly, this could throw off your entire accounting system.
The best way to protect against this is to hire a payroll service. That’ll let you focus on what you do best… Which probably doesn’t include filling out payroll forms.
When it comes to payroll for your company, there’s no room for error. Avoiding these 5 top mistakes will put you and your business in a much better place.
The post The Top 5 Payroll Mistakes That Could Ruin Your Business appeared first on Fundera Ledger.
from Fundera Ledger https://www.fundera.com/blog/2016/09/16/top-5-payroll-mistakes/