7 Payroll Mistakes to Avoid
Payroll is the heart of every organization—but not every organization knows it. The most important contract between a company and its workers is administered by Payroll: accurate pay from the company in exchange for hours worked by the employee.
Reporting and depositing payroll taxes to the appropriate agency in an accurate and timely manner is vital to your business. Late or inaccurate deposits may result in penalties and interest charges. These complex payroll tax requirements may seem intimidating but by learning a few simple concepts, you will be able to understand your payroll responsibilities and choose the best method for meeting them.
Payroll Management Options
There are four common methods for calculating and reporting your payroll taxes, used by many small business owners. The following is a comparison of these methods and the advantages/disadvantages of each:
|Manual System||Full Control||Tedious, Time-consuming, Prone to Error|
|Accountant||Will be familiar with business’ accounting info and can intergrate information||Most Expensive Option|
|Payroll Software||Payroll Calculations are Automated||Software Learning Curve, Deposits & Reporting will Remain Manual|
|Payroll Service||Shared Liability Saves time – Service Handles Deposits and Filings||Less Control, Less Flexibility|
3 Secrets of an Effective Payroll Department:
Regardless of the type of organization, effective payroll departments employ four best practices:
- Compliance: As an employer, you have specific payroll responsibilities that are required by government agencies. These agencies can be federal, state or local. Some of these responsibilities include, withholding amounts from your employees’ compensation to cover income tax, social security, Medicare, benefits, garnishments and other payments.
- Confidentially: Ensuring confidentiality not only means keeping this information private and protected, but also safeguarding any internal communication about payroll-related queries or activities.
- Staying current. Staying current requires payroll professionals to keep up with new payroll technology and advances. In some cases, new payroll regulations will spark vendors to develop advanced features or new functionality in their products that further simplify, safeguard or systemize payroll administration.