Common Payroll Problems That Cause Serious Issues
Payroll is a cumulative sum of all the financial records for employee salaries, work wage, deductions and bonuses which plays a large role in companies.
When it comes to payroll, it is crucial for companies to pay attention to how their Accounting Department is managing payroll to avoid these common payroll issues.
Working with inexperienced payroll processors can cause inaccuracy of information
To some companies payroll can seem like a chore. Some companies and human resource departments may hire a third party for processing their payroll or delegate an inexperienced employee. The third party or employee’s inexperience with a client’s workforce information can lead to making crucial mistakes during payroll processing. For example, social security information can be put in wrong which leads to delays in processing and worse, costly corrections.
Correct deduction amounts
Processing deductions from employee pay can be complex. Both state and federal laws apply to deducting certain amounts from employee pay. Because of this, companies and HR departments make errors during payroll in regards to utilizing the correct deduction amounts. For example garnishments are being escalated to levies with a new set of calculations.
Misclassification of employees
Many small businesses utilize several types of workers including temporary or seasonal employees, and freelance workers or contractors. Diversity in workers can lead to payroll issues. It is important to classify your employees correctly for taxes, Worker’s Comp, benefit premiums, and ACA reporting. Businesses are subject to paying their owed taxes along with any fees or penalties.
Current federal and state laws require employers to give overtime. Overtime generally consists of 50 percent of the employee’s typical hourly wage, in most cases, employees must be paid their hourly wage and the 50 percent overtime for each hour worked that is considered ‘overtime.’ Calculating these correctly can cause problems and concerns with employees. Not accounting for them correctly can cause an employer tens of thousands of dollar in excess Worker’s Comp. premiums.
Keep up with regulatory changes
Payroll regulations do change over time, and significant changes may be made to how payroll is processed for businesses across the country. To avoid issues from regulatory changes, businesses should stay updated with regulatory changes that may occur in their state or even around the country.
HR Ledger Inc. uses the most sophisticated and state-of-the-art payroll processing software available as well as staying up to date with any and all regulatory changes made.
Payroll isn’t just payroll anymore.
For more information, please call Malcolm or Scott today at 800-451-1136.