Common Payroll Mistakes

Whether your business is big or small, payroll is a complex aspect of maintaining your company. It doesn't matter if you employ a handful of people or manage hundreds of employees. You are required by law to send out paychecks regularly and accurately. There are several companies out there that can handle this service for you, but nothing comes without risk of mistake. Here are five common mistakes that can occur when it comes to paychecks and ways to avoid them.

Legal Changes

Whether you have a department that handles paychecks manually or you outsource your payroll services, you need to make sure that you are up to date with the latest legislation when it comes to taxes. If adjustments are not made, your employees will not be paying the correct amount. When this happens, as the owner of the business, you will be found at fault and responsible for the mistake. The more professional of a company, the less likely you will be at fault.

Being Late

It is illegal to issue paychecks late. If you make this mistake, your staff members can file a claim against you. It's a right of your employees to be paid on time and tardy paychecks won't help staff morale either. Make sure that information is collected and logged on time and have a back up plan if the company you work with is ever late.

Software Problems

If you run your payroll using software, make sure that you continuously update it so that you don't run into glitches. Sometimes these problems are unavoidable. If you're working with an outsourcing company, make sure that they compensate you for delayed paychecks or mistakes as they are responsible when error occur.

Save Your Records

Employers are required by law to maintain records of employment and employee pay for up to seven years. A simple way to avoid this mistake? Save your payroll records! If you don't, you may have to pay heavy fines.

Manual Filing System Omissions

When you keep your records in an old fashioned filing system, you are at a greater risk for loosing files or parts of files. Even if filing cabinets are locked, there is room for human error. It is best to keep records backed up in a digital files. Make sure you have several backups in case a computer breaks down or back up your files in an secure online storage program.

Human Error

This is the one mistake that is hardest to prevent against. The best way to avoid problems that arise because of payroll employee mistakes is to ensure that the people you hire to handle your company paychecks are competent individuals who have experience in this field or are detail oriented people that can handle every aspect properly.

By: aabadie

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