Payroll is a huge part of your business. If your employees are the muscle of your business, payment is the blood — it’s what keeps your employees working. If there’s a problem with payroll, your employees will let you know about it fast. It is very much in your interest to keep business payroll mistakes to a minimum. Unfortunately, sometimes they do happen. Here are three payroll mistakes to avoid, as well as some tips on how to fix payroll problems when they occur.
1. Misclassifying or Misidentifying Employees
This is often one of the most significant business payroll issues you have to face. It would seem that keeping track of your employees would be easy, but one typo in a person’s name, being a year off on the date of birth or failing to note an address change can result in missed payments, IRS discrepancies and other costly and time-consuming complications.
It’s also incredibly important that you correctly establish whether a worker is an actual employee or an independent contractor (W-2 vs. 1099). These are very specific classifications with major tax implications, so it is vital that you get this right.
You can avoid these problems by first making sure whoever is responsible for inputting new employee information is a very diligent, careful person whose work is double or even triple-checked. Secondly, you need to make sure you know the differences between employees and contractors.
Contractors are not eligible for overtime and have a specific timeline for how long they will work for you. They file with a 1099. Employees can receive overtime and have a set salary and specific expectations about when, where and how they work. They file using a W-2.
2. Paying Late
The last thing you want is to pay your employees late, especially if the company coffers are full. It undermines employee confidence in the organization, lowers morale and can even get you into trouble with the government. Avoid this by making sure you have a reliable payroll system in place that automatically pays out at the scheduled time.
3. Tax Issues
Another considerable payroll challenge you will have to face is tax issues. You must make sure you are paying the right taxes in full with regard to all your employees. You must submit the proper forms, and they must be error-free. You must have access to records to back up any filings you do with the IRA and be able to present them when needed. Any failures in these areas could subject your business to serious fines and penalties.
Contact BCM Payroll Services, Inc. for More Information
The way to avoid this problem — as well as the others mentioned above — is to work with an experienced, professional third-party payroll manager like BCM Payroll Services, Inc. We are a premier payroll services company fully equipped to manage all your payroll needs, including adding new employees, scheduling payments and making sure you pay all taxes correctly and on time. In fact, in the highly unlikely event you are penalized because of a mistake we make, we’ll pay for it.
If you’d like to avoid mistakes and enjoy peace of mind when it comes to your business payroll, call BCM Payroll Services, Inc. at 717-264-7374 or contact us online today.