5 Common Payroll Mistakes You Should Avoid

Amid running your business from day to day, you are responsible for handling payroll for your employees. Paying employees on time and accurately helps to foster a good relationship and keep them engaged in the business. With summer being the “busy season” for many small businesses, we took some time to highlight 5 common payroll mistakes you should avoid. 

5 Common Payroll Mistakes You Should Avoid

Inaccurate Payments

Keeping track of employee hours during the busy summer months can be challenging. Things such as vacation time, overtime, and sick leave can quickly lead to inaccurate payments if you get caught up in the daily hustle and bustle of your business.

Note: Inform your employees of time off/overtime policies and provide clarity if questions arise. Employees want a clear understanding if they receive paid time off and overtime for extra hours worked.

If managing employee schedules and hours worked has become difficult, use PayWow’s Time Clock. Increase your productivity and accuracy in managing your employees time worked with our virtual time clock. Our software will automatically calculate the hours your employees worked and integrate the information to simplify your payroll process.

Failing to Communicate Payday Changes (Holidays)

There are a few holidays during the summer that could easily affect your payroll schedule. Share your business’s payroll schedule with employees ahead of time to make sure they are aware of what to expect. The same applies for fall and winter holidays so don’t forget to tell your employee well enough in advance.

Tip (x2):

If you close on a holiday, make sure to communicate with your employees if they will or will not receive a paid day off.

If you or your payroll manager take time off, make sure payroll is completed before leaving to ensure all staff is paid on-time.

Employee Misclassification

There is a big difference between an employee and an independent contractor. Make sure you understand the difference before you hiring them.

An Independent contractor usually works multiple companies and has complete control over where and when their work is completed. Their pay is also a flat fee that is given once they finish the task.

An employee will typically receive training and you or a supervisor manages them. Employees are hired by the company to perform a specific type of work. They are also paid salaried or hourly and are subject to overtime laws.

Opting out of Workers’ Comp Insurance

Worker’s compensation is a form of insurance that provides benefits to employees who suffer job-related injury or illness. As a business owner, you are legally responsible for protecting your employees. Premiums for workers’ comp is calculated based upon employees’ classification, the work they perform, and the pay rate for each employee classification.

Invest in workers’ comp insurance and take time to educate employees on summer safety precautions for heat exhaustion, heat stroke, and dehydration.

Single Person Capable of Handling All Payroll

You’d be surprised at how many small businesses make this mistake. Having only one person in a company with the ability to handle payroll can lead to a disaster. If that person, who could easily be you (the business owner), is away or takes sick, payments to the IRS, state, and employees must be made.

It is imperative to have more than one person capable of understanding, processing, and handling payroll for your business. This must be someone you can trust and allow to do payroll outside of a crisis.

Take Control of Your Payroll 

Business managers learning payroll mistakes to avoid

Mistakes are bound to happen, especially when you are leading an ever-growing business that keeps you busy. Outsourcing your payroll and tax compliance needs to a trusted source helps relieve the stress of payroll mistakes. Let PayWow help you take control of your small business payroll so you can focus on what matters most. Click here to learn more about our all-in-one payroll solution.

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