Three Most Common Payroll MistakesOn April 23, 2021 by Walter Powell
To err is human, but when it comes to payroll processing, too many errors can become a serious problem for your company. Unfortunately, errors are incredibly common in payroll, and the consequences that follow are often catastrophic. Investing in payroll processing lawrence ks can help you avoid errors such as miscalculating overtime pay. This mistake, which is one of the most common, can result in employees being overpaid or underpaid. If you do not correctly calculate your state’s overtime rate for employees’ wages, you will find yourself with a mess to clean up on pay day.
Messing Up Tax Deductions
As an employer, it is your responsibility to deduct taxes for programs such as Medicare and social security from your employees’ paychecks. Too many employers mess this up and deduct either too much or too little from their staff’s wages—and who can blame them? Calculating the tax rate of each individual employee is quite a task. It is easy to make one little mistake, but unfortunately, one little mistake is all it takes to completely throw off your books. Paying close attention is crucial when you are calculating these amounts. Minimizing errors will minimize the penalties that you have to deal with later.
Misclassifying Your Staff
The difference between employee and contractor is an important one, but not every employer is fully aware of the distinctions. Some employers may try to classify staff as independent contractors in order to save on taxes and limit liability. Doing so can be a serious misstep, though, if the worker in question does, in fact, qualify for employee status. Too many companies make the mistake of misclassifying their staff and later paying a hefty price for doing so. Do your research on the differences between employees and contractors before you make any decisions that may later come with costly consequences.