As a small or growing business, there is a high chance of you not having reliable payroll management processes and systems in place, which makes you prone to making frequent payroll mistakes. In some circumstances, this payroll mistake can leave a black hole in your company profile, among which are low staff morale, fraud, and tax penalties for paying late or incorrectly.
As a business owner or manager, different issues of the business are competing for your attention, so it is understandable if you’re not familiar with every aspect of payroll and employment laws. And because they change so often, you’re prone to making frequent payroll mistakes.
HOW TO AVOID THE 4 FREQUENT PAYROLL MISTAKES
Not Automating Your Payroll Processes
The number one frequent payroll mistake is not automating your payroll processes. Without an automated system in place, it’s easy to make mistakes when calculating salaries, compiling tax returns, and keeping employee details and data.
Let’s face it, you can’t manually stay on top of the ever-changing deductions, laws, and incentives, there will be slip-ups. Also, your team will spend more time on the payroll process, which can be freed up to do other productive tasks like strategy, identifying trends, and so on.
A good way to avoid this frequent payroll mistake is to invest in payroll software that will automate all of these processes and more. It should be a system that can be updated frequently and handles your local laws.
Creating Room for Fraud
As business owners or managers, we dread fraud in our businesses, which is mostly discovered by accident or whistleblowing. Payroll fraud is one of them.
Because many small and medium businesses don’t put measures in place to checkmate or prevent it, this makes them vulnerable. This is because a single person has full access to the payroll system and the business’s bank account.
A simple way to avoid this is to make sure there is a segregation of duties. Different employees should have the responsibility of managing the payroll, vetting it, and having access to the business’s bank account.
Not Tracking the Trackables
Another frequent payroll mistake is not effectively tracking the things that need to be tracked, as this can lead to overpaying or underpaying your employees. A good example is an employee who benefits from additional paid leave or loses leave days.
Another example is losing track of the number of hours or overtime used by your employee, this can lead to overpaying or underpaying.
You can eliminate the hassle of tracking all the trackable by deploying automated payroll software. You can even make the process easier by deploying software that comes with employee self-service, this allows your employees to apply for and track their leaves, etc.
Not Keeping Payroll Records
It’s strongly advised that you retain comprehensive payroll records for your company. According to some standards, you must actively keep five years of records and archive at least five years of payroll records.
Ensure the records are kept digitally, all you need is a computer to keep them locally or in the cloud. If you need to find something, you can use filters or criteria to find it.
To summarize, it may be difficult to keep up with all of the payroll rules and guidelines, budgets, staff morale, and your company’s allure as a workplace. All of this can be negatively impacted by these frequent payroll mistakes, which can be simple oversights.
Fortunately, many of these problems can be addressed with the use of payroll software solutions. All you need to get started with such software is to click any of the links for Sage 300 People or Sage Pastel Payroll and HR.