When it comes to payroll, it’s very easy to make mistakes. Here are some of the most common mistakes business owners make.
- Not Keeping Accurate Records
One of the most important aspects of running a business is keeping accurate records. This is especially true when it comes to payroll. You need to make sure that you are keeping accurate records of all hours worked, as well as any overtime or vacation pay that may be due. Additionally, you need to keep track of any deductions that need to be made from employee paychecks, such as taxes or insurance premiums.
- Not Paying Employees on Time
Another mistake that businesses make is not paying their employees on time. This can lead to a variety of problems, including disgruntled employees and missed deadlines. Additionally, if you are consistently late in paying your employees, they may eventually file a wage claim against you with the state labor department.
- Not Withholding the Correct Amount of Taxes
When running payroll, you also need to make sure that you are withholding the correct amount of taxes from employee paychecks. If you withhold too little, you may end up owing the government money at tax time. On the other hand, if you withhold too much, your employees will end up getting a refund when they file their taxes. Either way, it is important to make sure that you are withholding the correct amount of taxes from employee paychecks.
- Making Incorrect Calculations
Another mistake that businesses make when running payroll is making incorrect calculations. This can include things like calculating hours worked incorrectly or miscalculating deductions. These mistakes can be costly and may result in your business having to pay penalties or interest charges.
- Failing to Deposit Taxes on Time
Another mistake businesses make is failing to deposit taxes on time. When you withhold taxes from employee paychecks, you are responsible for depositing those taxes with the government on a regular basis. If you fail to do so, you may be subject to penalties and interest charges. Additionally, if you fall behind in your tax deposits, the government may garnish your business’s bank account or seize your assets.
- Issuing Manual Checks
In today’s day and age, there is no reason to issue manual checks when running payroll. There are a variety of payroll software programs available that can automate the process and help to ensure accuracy. Additionally, issuing manual checks takes up a lot of time and can lead to errors being made.
- Not Staying Up-To-Date on Tax Laws
Finally, another mistake businesses make is not staying up-to-date on tax laws. Tax laws are constantly changing, and it is important to make sure that you are compliant with all applicable laws. Failure to do so could result in your business owing back taxes or interest charges