Your business isn’t that large and you thought payroll was easy enough to do on your own. However, all the adjustments and extra checks you’ve needed to prepare due to payroll errors have you questioning that decision.
Don’t beat yourself up over a few payroll mistakes. A recent survey of small business owners found that 40% of respondents weren’t confident running their own payroll.
The best way to reduce mistakes is to learn how to spot issues before submitting. Keep reading to find out about the 6 most common payroll errors and how to avoid them.
1. Missing New Hires
An easy mistake to make is not paying employees and contractors who joined the team during the past pay period. Do a quick scan and make sure that everyone that should get a check is on the payroll file.
2. Common Payroll Errors Involving Terminations
When an employee gets terminated, it often affects more than the total they get paid. You’ll want to make sure they get any final money due to them and make any final deductions. Make sure you have the proper termination documents for payroll before you start doing the deductions.
It’s easy to miss bonuses since they don’t often happen on every payroll cycle. Also, make sure to look at the bonuses and decide the best way to run them for tax purposes. You may want to put that check stub maker to work and cut separate bonus checks.
4. Raises and/or Promotions
Another often missed task on the checklist for payroll processors is making adjustments for raises or promotions. If you miss someone’s raise, you’ll need to calculate and cut a check for the back pay.
Promotions can affect more than the pay rate too! A promoted employee could go from part-time to full-time and become eligible for benefits. Or, an employee may become salaried instead of paid by the hour.
5. Payroll Withholding Issues
Making sure that you’re collecting the right amount of taxes or court-ordered deductions is paramount! Make sure you’re avoiding late payments to the government by collecting the right amount of taxes the first time. If you miss the payment deadline, your tax bill gets even bigger!
6. Issues With Benefit Deductions
Like court-ordered deductions and taxes, benefit deductions often get messed up. Health insurance is expensive enough as it is. You don’t want to overcharge your employees for their benefits!
Triple Check So Errors Don’t Cost You Time and Money
Payroll takes long enough to process as it is. If you don’t make sure everything is 100% accurate, the adjustments can cost you time and even more money!
If running the payroll in-house isn’t working, you can also hire a third-party company to run payroll for you! If you’re making lots of payroll errors, it may make fiscal sense to hire a professional to run your payroll.
We hope you enjoyed reading this article and that you learned about the six most common payroll errors and how to avoid them. For more helpful advice, keep scrolling our blog!