As a business owner, payroll is one of your biggest responsibilities. Payroll can also be complicated and confusing, and that’s before you consider all the changes to the rules and regulations that happen on a regular basis. Paying your employees on time and paying them correctly is critical to having a positive workplace and making mistakes in your payroll can lead to penalties, fines, interest and even lawsuits.
There are some common mistakes you’ll definitely want to avoid while doing your payroll:
- Incorrectly logging paid employee absences: The larger your business, the harder it can be to keep up with paid absences like vacation and sick leave.
- Deducting employee payroll incorrectly: Deductions must be made for income taxes, Social Security and Medicare, as well as healthcare costs and garnishments like child support.
- Not paying overtime: Some employees are exempt from receiving overtime compensation but for nonexempt employees it is critical that you correctly pay overtime.
- Incorrectly classifying employees: Smaller businesses often use part-time workers, temporary workers and even independent contractors.
- Missing deadlines: Payroll taxes must be paid on time. 1099s and W2s must be distributed to employees on time. Deadlines should be logged in a prominent place, so you never miss one.
- Not storing records for long enough: Most financial and payroll records should be kept for at least 4 to 6 years, but they also have to remain secure.
If you want to excel at payroll, you will need to be organized and efficient at filing relevant documents electronically and in printed form. You will need to make sure that your information is accurate or find a trusted accounting professional to maintain your payroll.