Most Common Payroll Mistakes Among New Companies
There are payroll mistakes that benefit employees, as well as those that benefit employers. But either way, a mistake is a mistake.
If you come across any type of mistake, such as overpaying or underpaying employees, it is imperative to act fast, discuss the situation with your workers, and provide a remedy that will allow both parties to put this in the past.
Most established companies have a payroll service in place. This allows them to take care of every last detail, regardless of how big or small, with less concern about making a mistake.
New companies are not always as fortunate. Since they are just getting up and running, they are more prone to make a mistake. Below are the most common payroll mistakes committed by new companies:
- Overpayment or underpayment. It can be tricky to pay each employee the proper amount, especially when dealing with different worker classifications and work schedules.
- Failing to accurately account for and pay the necessary taxes.
- Misclassifying an employee as an independent contractor. The IRS can help you avoid this mistake.
- Not including gifts and bonuses on employees' annual W-2. Remember that holiday bonus you gave the sales team? What about the gift cards you handed out to your customer service reps? It may not sound like a big deal, but the fair value must be reported.
- Ignoring a garnishment request. You don't want to deal with this as a new business owner, but you aren't given the option. If you receive a garnishment request, such as by the IRS, make sure you comply. You don't have a choice.
New companies have a lot on their plate, which is one of the reasons why they are more likely to make a payroll mistake. Don't fall prey to one of the situations above. Instead, know your obligation as an employer and do whatever it takes to implement the appropriate payroll system.