Paying employees is something you don’t want to get wrong. Your employees rely on you to pay them on time and do it right. It can cause problems for your company and team if you make mistakes.
Unfortunately, it’s not uncommon for problems to occur. Reports show that 82 million Americans have experienced problems with their paychecks.
If you want to avoid problems with the government and your finances, you can’t afford to make small business payroll errors. Keep reading to learn four things to avoid doing when handling payroll.
1. Not Paying Taxes
You have more tax obligations as a business owner when you pay someone as an employee. You are responsible for handling part of their Social Security and Medicare payments.
You’ll handle half of the payment, and your employee will handle the other half. You need to ensure all of this gets handled on your end to get the right amount of money to the government and your team.
There are also deadlines for payments, so be sure you understand all the rules.
2. Not Keeping Records
It’s tempting to clean house after you handle a lot of work. You delete files, destroy physical records, and do anything else to keep things clean and organized.
However, this is something you need to do carefully with payroll. The government requires you to keep payroll records for several years. Unless you have a unique situation, keep at least three years of records before you start removing them.
3. Misclassifying Employees
The changing workforce has shifted the type of employees you hire. Many companies no longer hire full-time employees for their companies. They work with freelancers who aren’t official members of the organization.
However, this creates more reporting responsibility for companies. Your tax implications are different when paying independent contractors instead of employees. Be sure to understand the differences when classifying different employees.
4. Not Getting Help
In an attempt to save money, it’s tempting for business owners to try handling payroll and other tasks themselves. This may be able to work in the short term. However, as time goes on and your business gets more complicated, this becomes a challenge.
Don’t hesitate to get expert help in this situation. Even though you’ll increase your costs by hiring a payroll expert, you may save money in the long run since you reduce the chances of mistakes.
You can hire an employee or outsource the work to a PEO or freelancer. Learn more about outsourcing the work to see the benefits you’ll receive.
Don’t Make Common Small Business Payroll Errors
Getting your payroll right is essential for running an effective business. Payroll mistakes can land you in trouble with the government, cause you to miss employee payments, and much more. Any of these issues can cause massive problems that cost time and money to solve.
But you can learn about some of the small business payroll errors beforehand to put systems in place to avoid them. Remember the issues above to set up a payroll management strategy that works.
Head back to the blog to read more business advice that will help your business thrive.