While paying your employees might seem like a straightforward task there are several potential payroll mistakes you could make. From managing seasonal staff, not complying with local, state, and federal payroll and tax regulations, and administrative duties of running a business…critical errors can happen to any small business owner! Here are five payroll mistakes made by small business owners and how you can avoid them.
5 Payroll Mistakes Made by Small Business Owners
Wrong Payroll Amounts
Paying the wrong amount might happen for several reasons. The wage amount could have been entered into the system incorrectly or the employee hours are misreported. It is essential to double check your payroll system and employee information, tax amounts, and payment information. If the original data is entered incorrectly, you are sure to have recurring payroll errors.
Incorrect Payroll Tax
This is potentially the biggest and most dangerous mistake small businesses can make while running payroll. Here in the US, the government collects payroll tax amounts on a pay-as-you-go basis. Also, depending on the location of your business there are different local, state, and federal taxes which apply to your small business.
If your small business fails to pay any owed taxes, you could face substantial financial penalties. The most common payroll tax mistake is missed or late payments. A modern payroll provider like PayWow will figure out which taxes pertain to your small business and take the complexity out of filing and paying both FUTA and SUTA on your behalf.
Difference Between Employees and Contractors
It is understandable that employees and contractors are different and even more so when considering their associated benefits and taxes. Many small business owners use contractors as temporary labor when needed. However, it is crucial to understand their role to avoid misclassification.
Be sure to research what classifies as a contractor to avoid contractor labor abuse established by law. This is not a choice your small business can make but a legal classification. PayWow makes it easy to add both employees and contractors to your payroll.
Established Payroll Schedule
Your small business’s established payroll schedule can have a massive impact on your operation and cash flow. This is without mentioning the effect it has on your employees. In the US the most frequently used schedules are weekly, biweekly, semimonthly, and monthly.
Consider your state’s laws regarding your payroll schedule to adhere to the required minimum payment period. While each pay schedule has its advantage and disadvantages, it is critical to choose the right schedule for your business and employees.
Late Processing Payroll
Small businesses want to avoid being known as an employer that fails to pay its employees promptly. It is understandable for business owners to be consumed by the day-to-day operation it can also cause you to forget about processing payroll. You can quickly rid yourself of these risks by signing up with PayWow! We will automatically process your payroll on the date you have scheduled, direct depositing funds for you!
Say Goodbye to Payroll Mistakes
Save time and money so you can focus on your business. When you use PayWow, you have an affordable full-service payroll and compliance solution for your small business. Our innovative software will automatically file and deposit your state, and federal payrolls taxes on your behalf.
Contact us today to learn how PayWow can help your small business reach its full potential!