7 Common Mistakes to Avoid When Doing Payroll for a Business

StrategyDriven Managing Your Finances Article |Payroll for a Business|7 Common Mistakes to Avoid When Doing Payroll for a BusinessDo you have employees? That’s great! All you have to do is cut them a check to pay them, right?

Unfortunately, it’s not that easy. That’s what has led the payroll industry to grow to a size of $81.5 billion.
If you’re handling payroll for a business yourself then you need to know what to look out for, so you don’t make any mistakes. Keep reading to learn seven common payroll mistakes that can cause problems for your business.

1. Missing Deadlines

When you deal with payroll, your employee paychecks aren’t the only money that you’ll be paying out. You also have to deal with government taxes.

You need to make a note of when your federal and state tax deadlines are for payroll. If you want to avoid missing your deadline, then either set reminders or automated payments for your tax obligations.

2. Not Keeping up With New Laws

Laws for payroll don’t stay the same. In fact, they change all the time. If you don’t stay up to date with what’s happening with the current laws, then you’re asking for trouble.

By staying up to date, you can make sure that you’re always following the law. You won’t have to worry about your next audit finding something that you missed.

3. Not Sending Tax Forms

Every penny you pay your team gets reported to the government. Shouldn’t they be the ones who send out your employee’s earnings for the year?

Wrong. That’s up to you to do. Make sure that all your employees receive their 1099 forms by the due date.

4. Bad Records

It’s required by law to keep all your records up to date, accurate, and available for several years. If you don’t, then you can face fines from the government.

This is why it’s necessary to invest in a record-keeping system that will keep things up to date. But keeping records in order isn’t easy. Contact a payroll service to get help getting your data in order.

5. Ignoring Garnishes

It doesn’t feel good to take payment from your team’s checks. But if you get a request from the government, you need to take action immediately.

Any mistake here can lead to a time-consuming process to correct.

6. Miscalculating Overtime

Overtime pay isn’t optional when you have hourly employees. You’re required to pay them for any extra time they work for your company. If you don’t keep accurate records of overtime hours, then you’re going to have problems paying people for their time.

7. Not Keeping Backups

If you’re using cloud software to handle payroll, then you don’t have to worry much about data loss. But if you manage everything locally on your office computers, then you run the risk of losing data.
Make sure to put a backup plan in place to save your data in case this happens. A backup service costs money but will save you time and money in the long run.

Payroll for a Business Isn’t Easy

If cutting a check to your team was all it took to do payroll, then the payroll industry would be doomed. But payroll for a business isn’t that simple. Make sure you avoid the mistakes above so you can prevent costly mistakes.

Are you looking for more business advice? Keep browsing our blog to read through our latest tips.

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