It’s normal for companies and small businesses who run payroll manually to make basic payroll mistakes.
With the many changing aspects of payroll, it can be hard to keep up with paying employees, filing all necessary government forms, and paying taxes in a timely manner. That’s why we’ve created this guide to help you solve the five most common payroll mistakes we see. TBM Payroll can not only help you avoid making these mistakes but help navigate solving any you may currently be making.
Get started fixing your payroll mistakes today.
Filing your payroll late could cause you to end up with large fees on certain payments. That’s why it’s key that your company and small business reports and deposits payroll taxes before specific due dates. By reporting your payroll in a timely manner, you can avoid penalties, interest charges, and fees that can easily be prevented.
This is one of the most common payroll mistakes made by small businesses, especially ones that hire temporary employees and independent contractors. If your business wrongly classifies an employee as an independent contractor or denies overtime to non-exempt salaried staff, you could potentially violate the Fair Labor Standards Act (FLSA).
This is a costly mistake that can lead to steep penalties. In order to protect yourself and your business, it’s important that you routinely familiarize yourself with the U.S. Department of Labor’s classification guidelines, IRS rules and regulations, and state rules that apply to your type of business. You can also contact the IRS for further clarification and guidance.
Not having completed, organized, and records stored on hand could be a costly and timely payroll mistake. The FLSA requires employers to keep three years’ worth of pay records. Additionally, many state and specific agencies generally require timesheets, canceled checks, and W-4 forms to be held from four to six years.
It’s key you know what records to hold onto and how many years your business needs to keep them on file. Any missing, incomplete, or inaccurate records could result in government penalties and bigger headaches down the road.
If your employees owe money by way of court or to other parties, the person who handles your payroll needs to make sure the payment is being sent to the right recipient. There are many rules for different types of employee garnishments, like child support, taxes, and fines. So, it’s best practice to comply with these specific rules to avoid fines and employees unable to retrieve payments.
Fringe benefits, such as stock options and employee discounts, are subject to federal income and employment tax withholding. It’s essential you report these forms of compensation to the IRS, or you could end up with significant penalties.
The payroll process is complicated and has continuously changing rules and nuances. In order to avoid payroll mistakes and keep your payroll up to date, contact us. Here, at TBM, we’ll provide you with a full-service payroll option that includes easy deposits for employees, payroll reporting, and much more. Discover how we can help you with your payroll management administration today!