Are you tired of making costly mistakes when it comes to payroll processing? Look no further as we provide you with tips and tricks on how to prevent common payroll processing mistakes.

As a business owner, managing your employees’ salaries can be a daunting task, but it doesn’t have to be. In this article, we highlight some of the most common payroll mistakes and then break down how to prevent them. By following these simple steps, you can ensure accurate and timely payroll processing every time. So let’s dive in.

Misclassifying Employees

Misclassifying workers is one of the most common payroll errors. Businesses typically employ two types of workers: full-time employees and freelancers or contractors who operate under more flexible terms. If you make employee classification mistakes, you can end up paying minimum or overtime wages to contractors or underpaying your permanent workers. These mistakes can attract heavy penalties and erode employee trust.

To prevent serious payroll mistakes:

  • Ensure freelancers aren’t treated the same as regular employees.
  • Consider hiring a reliable payroll management service to accurately categorize workers, helping you steer clear of compliance and legal issues.
  • Think about hiring contractors or freelancers through leasing firms to shield your company from penalties related to misclassification. While it may be more expensive to hire freelancers through a leasing firm, this is a great way to significantly reduce the risk of employee misclassification.

Failure to Maintain Accurate Records

Maintaining accurate records is crucial to prevent payroll mistakes. Old, outdated, and inaccurate records can lead to compliance and other issues that can leave your business exposed to legal risks.  To prevent errors and improve your payroll process update employee data regularly and store it for long enough (as mandated by law). If it’s time-consuming to ensure employee records are up to date, hire a payroll processing company near you in Santa Rosa to perform the task.

Missing Payroll Tax Deadlines Frequently

Failing to meet payroll tax deadlines can lead to significant legal issues, potentially damaging your company’s reputation. You might also incur substantial late fees and penalty charges, and your employees may lose trust in your business.

If you miss payroll tax deadlines frequently, consider investing in an all-inclusive payroll system designed to help users keep track of tax deadlines. Payroll software typically includes an integrated calendar feature that allows for the scheduling of automated payments, offloading the burden of remembering due dates for paying taxes.

Inaccurate Tax Calculations

Tax rules and laws change every year and if you have offices in multiple countries, you must stay updated with their tax laws too. Failing to use the correct tax rates can lead to inaccurate calculations and payments, potentially resulting in penalties.

Depending on your location, you will stay up-to-date with local income tax, medicare tax, state income tax, and Social Security tax laws. Working with a payroll processing company near you in Santa Rosa can help ensure that you do not miscalculate your taxes.

Are payroll errors hurting your business? Let Virtual Jeannie Bookkeeping Services help. Our team can identify and eliminate inefficient processes to streamline your payroll. To learn more, call 707-664-1425.