As a small business owner, you are a very busy running your own company. When a mistake occurs, it can cost you big time. In many cases, small businesses can't afford mistakes—even if they are just small ones. Each and every dollar made needs to go to the growth of the business rather than repairing slip-ups. For that reason, it is important that you avoid costly mistakes that are often made throughout the payroll process. Here are three of them:
Mistake #1: Not Properly Classifying Workers.
There are more and more independent workers in today's day and age. As a result, worker classification is becoming a problem for business owners. However, when it comes to classifying employees, there is a clear difference between an independent contractor and an employee, and it is an owner's responsibility to know what the difference is. After all, this difference is going to have a large impact on how your payroll is processed. The IRS has information that can help you determine the difference between an employee and an independent contractor, if you need it.
Mistake #2: Failing to Maintain Your Own Records.
Whether you have a professional company taking care of your payroll or you are doing it yourself, it is imperative that you maintain your own set of records. If you aren't sure whether something is important enough to hang onto, then you should hold onto it just to be safe. It is always better to be safe than sorry when it comes to anything, but this is particularly true when it comes to your company's finances. In terms of payroll, you should keep cancelled checks, time sheets, tax forms, proof of payments, etc.
Mistake #3: Inputting Inaccurate Employee Information.
Since you are going to be dealing with other people's finances, it is crucial that you ensure you have all of their personal information correct. Otherwise, it could keep them from getting paid. Therefore, double- and even triple-check their information, including their name, address, date of birth, social security number, start/termination dates, hourly rate, overtime, etc. Inaccuracies with any of this information can cause huge headaches when it comes to payroll processing.
There is ultimately no room for the aforementioned errors—or any error for that matter—when it comes to payroll and financial matters in the business world. To help ensure your business is in good shape financially, the best thing you can do is to hire a well-versed accounting firm like Herman & Cormany to take care of your payroll for you.Share