What is Payroll Processing?
The word payroll processing can be defined as an elaborate process that deals with a lot more than salary calculations. But the process can be intimidating most time if you do not know what to do or how to go about it.
Payroll processing can be referred to as an essential business function that involves arriving at the employees’ ‘net pay’ after reducing some necessary taxes and deductions.
Since we know what payroll processing means, let’s look at some payroll processing points before getting down to the common mistake small businesses make with the payroll process.
Now, either you take every necessary step to manage your company’s payroll internally, the most important thing is understanding the payroll processing’s ins and outs to avoid any issue.
Making a mistake from the processing can hurt payroll. Taking it with a levity hand and not calculating it well may lead to a series of problems. If you own a small company and have little experience doing payroll, you may make costly mistakes.
Whenever you are doing your payroll processing for your small business, try as much as possible to pay a lot of attention and also attempt to verify several times.
Top 5 common mistake small business makes with payroll processing.
Inaccurate Information on Forms
Most of the common mistakes among small businesses are low data entry, and inaccurate records can lead to discrepant tax fillings.
These issues can result in costly fines and penalties that you shouldn’t need to worry about as a small business owner.
Then try to make sure you have the correct data for your employees, such as:
- Full name
- Official start date or termination date
- Date of birth
- Tax file number
- Current address
- Payroll details (Hourly rate/salary, employment period, etc.)
Misclassification of Employees
For some years now, our finding shows that businesses do hire non-traditional employees such as freelancers, consultants, independent contractors. Meanwhile, employing this type of talent mostly results in labor costs savings, reduced liability, and flexibility in hiring and firing.
Well, it may sound appealing for your small business, but no that it can also lead to misclassification of employees meaning that workers have been labeled as independent contractors instead of employees.
By not Having Important Reports on File
Employers are so legally obligated to keep certain documents on file for each employee when it comes to payroll processing. Note that it is very mandatory to keep records and related documents such as timesheets, I-9, W-4, pay stubs, etc., for some time.
Neglecting to Run Payroll on Time
Ensuring staying on top of your payroll system in an organized and coordinated way will save many headaches and disgruntled employees.
Because when the CEOs, presidents, and managers are busy at all times of the day, it is much understandable that employers may fall behind when it comes to payroll processing.
Also, the result will be displeased employees but potentially expensive errors if you’re rushing through the process.
Not Automating Payroll Processing
Running payroll processing Manually requires more effort on the owner’s part and has a higher risk of error. Small businesses overlook the automation to conduct payroll, as they feel they might not be the right candidate.
This is a common misconception, as there are several options for automating payrolls, such as payroll software and national and local payroll providers.
Another connection you might have with your small business is the local payroll service like CSI Accounting. Payroll provides all the security and options that a national provider would and a personalized connection with your small business.
Consider using automating your payroll process and eliminating the monotonous task of creating spreadsheets and time card notes.
When considering what mistakes to expect from your small business, steer clear of them and what to do if one occurs can help guarantee your business runs properly.