Payroll is a task every small business owner has to deal with, one way or the other. It’s often a tedious burden and the complexity of it sometimes leads to mistakes. In talking to our customers, we’ve learned a lot about the challenges people face both doing payroll themselves and working with other payroll providers.
The following is our first five in the list of top 10 payroll mistakes that you can easily avoid. Follow us on Twitter for more insights.
Don't make these mistakes:
Not paying attention to schedules around bank holidays. It's important to account for these in your payroll schedule. Many holidays require you to process your payroll a day early!
Approving payroll without verifying pay periods or check dates. You should always make sure the dates of your payroll are correct. A mistake could create inconsistencies were you to be audited, as well as create a tax notice, since check dates dictate when tax payments are due. You also don't want to risk employees claiming they haven't been paid on a date they worked because the dates are wrong.
Not previewing your payroll to verify a new earning/deduction/tax is calculating correctly. A good payroll service should allow you to preview your payroll run before actually running the payroll. This allows you to make sure everything is in order before approving the payroll.
Assuming wages are reported based on pay period, not check date. The check date (not the pay period) determines what quarter/year that payroll will be reported under when filings are produced. This misunderstanding can cause many costly corrections at year-end.
Writing checks outside your payroll service's system and not recording the checks in the payroll with your service. This can cause tax issues since all the correct information may not be reported to the agencies.