Your business may be considered small, but running it is not an easy task. It can be too much if you are responsible for sourcing your products, creating marketing strategies, and managing payroll. But with proper planning, you can ensure these tasks are manageable.
One perfect example of an overwhelming task for business owners is payroll. In this blog post, we'll talk about the most common errors in payroll processing and the benefits of getting a payroll management system for your business.
5 Common Mistakes in Payroll
Business finances are some of the most complicated things to handle. There are several tasks involved in processing payroll, and there are also many ways business owners can make mistakes. Here are some common ones to look out for.
Miscalculating Pay
Errors in pay calculation are at the top of payroll mistakes. There are many ways pay can be miscalculated. There are payroll deductions, commissions, and tax payments payroll administrators need to consider. Furthermore, there are different rules when it comes to overtime pay and holiday pay.
Your employee's trust will take a hit when you continuously make mistakes with their wages. Payroll correction will help you fix the discrepancies, but tracking the mistakes can take a lot of time.
Missing the Payroll Deadline
A company's payroll is often scheduled. Employees will anticipate getting paid after a given length of time. Imagine what they would feel if their pay is delayed a day or two. Giving your employees their pay on time builds trust and good rapport between them and the administration.
Failing to fulfill tax obligations that come with payroll can also cost your business penalties, late fines, and even legal issues. It should be a business owner's top priority to properly schedule the payroll and know the due for payroll taxes.
Forgetting Tax Forms
The busiest day for processing payroll is at the end of the year and the beginning of the new year. After a full year of paying employees and taxes, businesses should give the necessary tax forms to their employees. Most employees need the W-2 form that they will use to file for their annual income tax return.
Forgetting or not providing your employees with their needed tax forms is a big inconvenience on their part. It can also mean trouble for your business when your workforce complains about missing tax forms.
Failure To Keep Detailed Records
If there's a time business owners need to be thorough, it is when they do payroll records. The government recommends at least three years' worth of records regarding payroll operations. These records should include the employee data such as total hours worked, payment rates, and dates. For other legal purposes, some may require more years of records.
Complete records help you prepare for possible future audits and make the payroll process more efficient. Without the records, your business will be at risk of miscalculating payment and misidentifying your employees.
Failure To Track Employee's Time and Overtime
Most companies pay employees based on the time they log at work. Standard rates apply in the first 40 hours for a permanent employee. Depending on company’ rules, overtime rates may vary. Improper time tracking can lead to errors in payment. It can also be upsetting to the employees when they are underpaid because of lost time.
Here are some overtime situations that employers often overlook and fail to track.
- Employees doing necessary work during break time.
- Employees traveling in between sites.
- Employees participating in business-related activities outside of regular business operating hours, such as attending workshops and training.
What Is a Payroll Management System?
For companies, a payroll system can handle, automate, and administer payroll. A payroll management software is an application designed to make the payroll management process convenient. Payroll management systems can eliminate the manual work for payroll administration, which translates to fewer errors in payroll.
If you are still trying to decide if you should invest in payroll solutions, here are some excellent reasons you should.
Error-Free Calculations
The last thing you want to happen with your payroll is a mistake in calculation. It can be stressful not just for the employee but also for you since tracking the error takes time. Underpaying your employees will lower their morale, and overpaying them will disrupt your business's cash flow.
An employee payroll management system can significantly decrease the risk of making errors from manual payroll processes. You can ensure that your employee receives the exact amount of their salary every pay period.
Data Security
Collecting employee details is a necessity of payroll processes. Choose payroll management software with top-notch security to ensure that payroll data is only accessible to the human resources department and authorized personnel. The payroll employee database contains sensitive information such as addresses, birth dates, bank account numbers, Social Security numbers, and many more.
Saves Time
Time has significant value for every business. You can't afford to spend all your time on just one aspect of running your industry. A payroll software helps you skip manually entering long pay stubs, doing calculations, and individually depositing pay into your employee account.
By investing in the right software, you can automate payroll. Other payroll software can perform direct deposits. All you need to do is to authorize the transfer, and the system will deposit the money to your employees' bank accounts. You can go through your usual payroll routine hassle-free and more quickly.
Payslip Generation
Creating your employee's payslips is a grueling task. Imagine if you have 20 employees. How long would it take you to finish all the payslips and give it to them? The payslip is essential to employees since it contains the details of their pay, allowing them to see if they are paid right. It is also used for income tax filings.
A good payroll software can generate a payslip in an instant. This feature will be extremely helpful for growing companies. The more people you hire, the more payslips you need to generate, and this generation feature will make it easy for you.
Timely Notifications
Sometimes, work gets too busy, and business owners tend to forget their other tasks. A payroll solution is your friend during hectic workdays. You can customize your software to notify you of important reminders to ensure you meet necessary deadlines.
You can also schedule the payroll ahead of time for a more efficient process.
Get Profession Payroll Services at Unloop
As business owners you have a lot on your plate, not just managing the payroll. Fortunately for you, Unloop offers a payroll service so your employees' wages are done for you. Here are some of the things we can do for your business.
- We set up your business with a cloud-based payroll and benefits management system to handle all your payroll needs.
- We generate year-end reports for your employees and send them so they can file their taxes at the end of each fiscal year.
- We automate your entire process. So when the payroll period comes, all you need to do is to click a button.
Payroll is a tedious process. Focus on other aspects of your business and let professionals handle your payroll. Aside from payroll, Unloop can also do bookkeeping, taxes, accounts payable, and forecasting.
Book a call with us and talk to an expert for free!