As a payroll software company, we at Dominion know all too well that processing payroll has a lot of factors that processors have to consider. There are a lot of unnecessary expenses that can really add up if you don’t monitor them closely. Making a mistake on payroll not only creates disgruntled employees but also can rack up some penalties and fines from the government. Using a payroll software-as-a-service is the best way to avoid these mistakes, but obviously not every company is able to do that. If you’re still manually processing payroll, check out the three most common mistakes that even seasoned payroll professionals make.
1. Not Paying Accurate Taxes
Managing payroll taxes can be extremely tricky. Processors have to know the local payroll tax rates for the location that each employee lives as well as state and federal tax information. Recording those wages and accurately paying them is a big part of running a smooth payroll. If you fail to pay the correct amount of taxes, the government can hold your business accountable. This can result in any number of fines, depending on the magnitude of the mistake.
2. Transposing Labor Hours
Depending on how you’re tracking your time & attendance, this can either be extremely easy or extremely hard to do. If you’re tracking time on spreadsheets or adding up paper time cards, you can cause some major issues with your payroll. After all, the risk of human error is incredibly high when you’re manually calculating labor hours. However, if your company uses an electronic time and attendance program, streamlining labor hours into payroll should result in significantly fewer errors. As long as your payroll and time & attendance are completely integrated, there is no dual-entry required and you’ll never have to worry about miscalculated labor hours.
Want to see how much your business could save by using a timekeeping software? Download our labor management calculator here.
3. You’re Not Properly Calculating Overtime Pay
Overtime rate calculations can vary from business to business, but once your business chooses their overtime rate calculation, it’s important that it becomes a standard that applies to everyone across the board. Failing to do so could result in fines from the Fair Labor Standards Act (FLSA). One way to go about standardizing this is to use a software that can automatically calculate employees overtime. This ensures that everyone is being paid fairly for their time worked and records all that information so you can pull it whenever necessary.
Every point listed here can end up costing your business time and money. Not to mention if you fail to set up your payroll correctly from the start that will become a huge mess of liability. The best way to avoid these common mistakes is to find a software that you trust. Even if you prefer to process in-house, you need to be able to rely on your payroll software. This is one area of business that is worth investing in. Want to read about the perks of using a Payroll Software as a Service? Read here or request a demo below!