To make sure you are doing your employees justice, our professionals over at Excellent Admin have put together 5 common mistakes that business makes when it comes to payroll services. By keeping these mistakes at the forefront of your mind, hopefully, you as the employer can avoid them.
Having employees in your company comes with a lot of responsibilities. When it comes to figuring out what the most important responsibility a company has to any employee, all you have to do is put yourself in their shoes. If you were an employee, what would your biggest concern be? Getting your paycheck. Just like the business owner, employees are also extremely concerned about being paid for their work. Working for you is an agreement between the two parties, so they better get what they were promised.
1 – Not Staying Current on The Law
You need to make sure that you are taking the proper amounts out of the check when you issue it. That means you have to stay current with the local, state, and federal requirements that applied to the paychecks. If you aren’t staying current with those laws, you might not be taking what you need to out of the checks for your local taxes. That comes back on you in multiple ways. First, it could cause a big red flag for the IRS. Second, it puts a red flag on your business from the local government. Finally, you will be responsible for making up for those missing numbers, and depending on how long the issues have been going on, that could be a lot of money.
To avoid this, you really have two options. If your payroll is done in house, you should look to send a calendar event that has you checking for changes in the law. Some areas will change more often, so it really comes down to where you live. If you want to stay super safe, you should look into the laws that affect employee paychecks at least once a week. Depending on the size of your company, even a few days could rack up to a few thousand dollars easily.
The other option you have is outsourcing the entire process for your business. Outsourcing your payroll services means you only have to manage the timesheets for your employees and send them out at the right time. The company that is handling the employee paychecks will now be responsible for a stay up on that compliance. They should have an entire team that is dedicated to keeping up to date on the local laws, so your paychecks are always right. If they aren’t you can turn around blame them for the difference. Having that ability to say it’s not your fault might really come in handy if the IRS comes knocking.
2 – Missing the Agreed Upon Pay Schedule
If you tell your employees that they are going to be paid once a month or bi-weekly, they better be paid when you say. No one wants to finish payday without being paid. That could create a lot of problems for your business. The resulting neglect could create issues on your taxes, and, even worse, with your employees. If your employees aren’t getting paid on time, what’s to stop them from walking out? Not much to be honest. They already know your competition, too, and if they have to go to work there to get paid on time, they will. Make sure you keep your employees happy by paying them when you said you would.
3 – Ignoring or Forgetting Wage Garnish Notices
If you get a notice for a wage garnish or child support, you better tag that directly into the employee’s file. You don’t want to miss those notices, as they can spell disasters for you with IRS, and your employee. You need to make sure you are deducting the proper amount from each paycheck. Remember, they notice can come from local courts or the IRS, so make sure you stay on top of it. If you have to, set another calendar reminder for every pay period to make the deduction.
4 – Not Sending 1099s
If you work with subcontractors, you have to make sure you send them their 1099s. Just because it’s a subcontracted employee doesn’t mean you don’t have to report working with them. It’s quite the opposite really. If you don’t send your 1099s, it’s on your shoulders, and not their’s. They might still report the income the received from you, and that can come back to your as penalties for not sending those 1099s. Stay on top of your employees, no matter how they are working for you if you want to avoid penalties.
5 – Miscalculating Overtime
If you aren’t keeping solid track of your employee’s work hours while paying them hourly, you might be underpaying them, especially if you are working into overtime hours. You need to keep solid track of employee hours, so you can make sure you are paying them what they deserve. If you don’t report the proper amount of employee hours, the IRS might have a thing or two to say about that. Instead, try to keep your time tracking as simple as possible. Keeping it simple will make it easier for your accountant to separate employee work hours and get the paychecks right. If you have employees on a 40 hour work week, your accountant knows that anything over that mark counts as overtime.
Need Help With Payroll Services? Get An Excellent Admin
There is so much to stay up to date with when it comes to employee payroll. If you don’t have the time to dedicate to ensuring your payroll is always right, you need to employ someone who can. If you are looking for that perfect payroll manager for your business, you should reach out to Excellent Admin. Our team of accounting professionals will help you keep your payroll update on the current laws, and make sure your employees are getting what you owe them. We want to help your team retain your best employees by taking the importance of payroll services off your shoulders. Contact Excellent Admin to see what we can do for your business’ payroll needs.