If you have employees you will have to deal with Payroll and Timekeeping at some point. The truth is that it deserves your attention, because all salaries and wages paid to employees are a major expense for many companies. When payroll taxes and employee fringe benefits are added to the mix, the cost liability can increase significantly. Setting up and utilizing proper procedures for accurate timekeeping followed by maintaining integrity of payroll is of vital importance in profitable business management.
At the end of each pay period, the employee should complete a time sheet; it should be reviewed for accuracy by the manager prior to being submitted to the payroll department.
Why is this important? Wasted time. If you don’t have a precise record of how much time your workforce is really investing, then there’s no way to judge your return on investment and resulting company profitability. You also prevent yourself from being able to identify processes that are inefficient (for example, accurate timekeeping can help you determine if there’s a particular task that takes your employees a long time to complete on a regular basis, and therefore could benefit from automation, additional training, and so on).
Wasted money. Small business owners in particular need to spend their money wisely. Even if your timekeeping records are only off by a small amount, the resulting loss in profitability can really mount over time – and you may end up spending even more money trying to correct mistakes.
Managing payroll and timekeeping can be an enormous job. Mistakes can be costly in more ways than just money. Things like low employee morale, unmotivated staff and high turnover can negatively affect your business. Here is a list of the most common mistakes that you should be aware of when processing payroll:
- Misclassifying a Workers Employee Type
- Miscalculating State Unemployment Tax
- Improper Overtime Payments
- Mishandling of Garnishments, Levies or Child Support Payments
- Poor Record Keeping and Data Collection
- Paycheck Security Issues
- Missing Tax Deposits and Filing Deadlines
- Ignoring Taxable Items
- Incorrect Information on W-2
- Misinformation on 1099 Forms