As a business’s success grows and more and more money starts to come in, business owners may start to feel good about how things are going. The customers and clients are happy, and the employees are showing up for work with smiles on their faces, so it may seem as if nothing can go wrong. Even though it is possible for a business to run smoothly and face very few setbacks, something going wrong can happen fairly easily.
Some businesses may experience bumps due to difficult clients or a lack of business, but there are others that have suffered due to issues regarding their payroll systems. With this being an important aspect of the business, this is why business owners want to ensure that the person who is in charge of this does not do anything to put the business at risk. It is not everyday, but there have been many who have made some of the worst payroll mistakes that can be made, and as a result had to pay fines or have even lost employees.
1. Improper setup and maintenance
Failure to setup and maintain payroll properly can lead to a company having to pay fines and face penalties. Not setting up state, federal and local taxes, registering the business and checking wage calculations are often what leads to these fines. They can easily be avoided, but people have to pay close to what they are doing and what the laws are pertaining to paying employees.
2. Missing or failing to meet deadlines, submit deposits and run payroll
All businesses have to report and deposit their payroll taxes. There is going to be certain times that this will need to be done, so figuring out when this information should be submitted and submitting it on time is crucial. Not only can this lead to businesses being charged interest, but they can lose employees as well because they may not want to work for an employer who doesn’t pay them in a timely manner.
3. Improper record keeping
Employers should always have record of paychecks, bonuses, timesheets, W-4 forms and cancelled checks. Failing to keep record can lead to books being unbalanced and cause other things to be in disarray, which means businesses will have to spend time sorting through things and regaining order.
4. Payment miscalculations and mishandlings
Whoever handles payroll for a business is responsible for making sure guidelines are being followed and that any money that is owed by the employee, such as child support or wage garnishment payments, is deducted from their check and sent to the recipient when the payment is expected. Should this not be done, the business could be fined.
5. Lack of backup
Ideally, a business should have more than one person who can handle payroll incase the primary person falls ill or cannot make it into work. If no one can handle payroll when the primary person is gone, this can delay a variety of things. It is also necessary to have a backup payroll system for times when the computerized payroll system fails.
No one enjoys being fined or paying penalties for the mistakes they have made, especially when they could have easily been avoided. It is understandable for businesses to get wrapped up in things and get distracted, but payroll mistakes will only cost them more time and money if they do not do what they are supposed. With this being the case, businesses should ensure they pay close attention to their payroll systems and adhere to the state, federal and local laws or hire a third party payroll service to handle aspect of the business for them.