As a small business owner, your attention is getting pulled in many directions at all times and sometimes things fall through the cracks. Payroll shouldn’t be one of those things as payroll errors can have a big impact on you and your employees!
Keeping up with a small business payroll can often get lost in the mix, so read on to learn how to focus down and avoid making some critical payroll errors.
1. Miscalculating Overtime
This is a big mistake and is against the law in pretty much every state. You could face serious fines on top of having to back-pay overtime to employees. Even worse; your employees can file a lawsuit against you and sue for lost wages and damages.
Forgetting to pay overtime or miscalculating how much to pay your employees is an error that can be avoided with the help of a paycheck stub generator. This way all overtime hours will be calculated and your employees can see that their overtime hours are being properly accounted for and paid out.
2. Submitting Payroll Too Late
As a small business owner, you are always busy and can hardly seem to catch a break. One thing you cannot let slip through the cracks is your payroll deadline. Missing your employee’s payday will surely lead to some unhappy employees and might lead you to put up a “help wanted” ad.
The money you pay your employees is their livelihood and they depend on it to support themselves and their families. It is very important to not miss a payroll deadline and to show your employees that you respect them and their livelihood.
3. Not Withholding Payroll Taxes
When calculating small business payroll, do not forget to withhold taxes! This lesson is usually learned after your first year of paying an employee. If you simply write out a check of the amount earned, you are essentially paying them under the table.
When paying employees, you must withhold, file, and pay taxes for each employee. Failing to do so will either leave you with a hefty tax bill at the end of the year or it could lead to trouble with the IRS.
4. Not Keeping Good Records
You can never be too thorough when keeping payroll records. The FSLA requires employers to keep payroll records from the last three years. This includes hours worked, jobs worked, pay rates, pay dates, tax information and withholdings, and more.
This may seem like a lot of information to store for such a long time, but it’s better to be safe than sorry. The more detailed records you can keep, the better off you are in the event of an audit.
How to Manage Small Business Payroll
Payroll is a lot to think about each week and you really can’t afford to make an error. A smooth-running payroll operation is the backbone of your company and is necessary to keep employees on board and happy. If you can’t manage it on your own, hire a paystub company that will make it easy.
And if you found this article helpful, check out the rest of our blog for more great info.