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Are you a business owner looking for ways to process your payroll in the most effective way? 60% of small business owners report that they’d like to outsource their payroll to someone else.

Whether you are a small or large business, careful handling of your payroll is crucial to success. Read on to learn more about the 6 common payroll issues to be aware of for your business!

Failing to Ensure Accurate Classification of Employees

Regardless of the size of your company, there will be employees and contractors. These individuals are on different pay scales depending on their position. It’s crucial that your payroll system reflects the classification of your employees.

This is important for all employees but for those with recent changes in their position. Whether they’ve gotten a promotion or demotion, employee classes impact their pay rate.

Check your payroll system for accuracy before each pay period. This will help you ensure you aren’t overpaying or underpaying your workers.

Not Knowing Your State’s Overtime Laws

The people operating your payroll system should have strong knowledge about overtime law. Some of the most important parts of these laws are the age and hour limitations for an employee.

Avoid working your employee for longer than the law allows. Ensure their pay is an accurate reflection of the time worked. If they work overtime, pay them for it at the proper rate to avoid an issue later.

Ignoring the Importance of Payroll Garnishments

Sometimes an employee won’t receive every penny of what they earn – and it’s through no fault of your own. Your paycheck generator should have accurate internal notes for each employee. These should provide information about their unique circumstances.

For example, let’s say you have an employee with a Court Order of the payment of some earnings for child support. If you fail to remove this part of the paycheck and send the money to the right recipient, you may be on the hook for it yourself!

Not Processing Payments Before Pay Day

Avoiding late payments to your employees and contractors should be one of the most important aspects of your payroll system. If your company pays employees every two weeks, or on the 15th and 30th of each month, be sure that you stick to that.

Don’t be the employer who isn’t paying their people on time. Whether it’s intentional or not, doing so can cause you some problems down the road. This can lead to unhappy employees, a lawsuit, or both.

Inaccurate Payroll Reductions

There are a number of different payroll reductions that must be accurate so that you are sending portions of an employee’s pay to the proper place. For example, an employee must have social security and federal income tax withholding removed from their check.

You’ll also need to note any health or retirement contributions that an employee has. These must be withheld from an employee’s check so that they go to the right place.

Relying on Inaccurate Timesheets

Whether your employees are on a weekly payment schedule, bi-weekly, or monthly, you must have accurate timesheets so that payments are correct. Be sure that you stress to your employees the importance of tracking their time and submitting it to the payroll department on time.

if you don’t have proper timesheets for an employee, you won’t be able to pay them what they are owed for their time worked.

Wrapping Up: Keep These Payroll Issues in Mind

Payroll issues can be detrimental to your business – especially when you don’t catch them for an extended period of time. By understanding the potential issues to watch for and being diligent about payroll, you can help reduce the chance that you have a costly payroll error in the future.

Check out our blog section for posts with helpful information to put to use in the daily operations of your business today!