Common Payroll Mistakes to Avoid for US Businesses

Common Payroll Mistakes to Avoid for US Businesses

Payroll employment increased by close to 175,000 in the month of August 2015

-U.S. Bureau of Labor Statistics

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While operating a business, keeping the employees satisfied is one of the most challenging tasks.

Apart from comfortable infrastructure and good working environment, financial reward for employees’ efforts is the best way to keep them happy

Therefore an effective and efficient payroll management system is necessary to ensure all employees are paid what they deserve.

Managing payroll without errors can be a challenging task for organizations

The Common Payroll Mistakes US businesses make are…….

Delay in Payroll Processing

1.

Delay in crediting the salary can lead to employee dissatisfaction and ultimately drop in productivity

Improper Payroll Setup 2.

Payroll has to be set up correctly by incorporating all the important aspects such as taxes, reimbursements and various payroll laws.

Classification of Employees

3.

Wrong classification of employees can lead to significant penalties and wage and hour audits.

Backup Withholding 4.

Obtaining Form W-9 is very critical before vendors are issued payments. If this is not done, a backup withholding of 28% of payment amount should be done. Failure to do so can lead to penalty being levied by the IRS.

Incorrect Payment 5.

Incorrect payment can lead to a lot of complications such as over-payment, miss payments and use of wrong tax code which can lead to loss of goodwill.

Improper Records 6.

Records of any kind of payment, be it a gift or year-end bonus, should be maintained to avoid penalties when audit is conducted by the IRS.

Exclusion of Awards, Reimbursements and Gifts

7.

Gifts, prizes and awards are taxable fringe benefits and must be included in taxable pay. Reimbursements must be accounted for only if there is a business connection to the expenditure.

Form W-2 Errors

8.

Form W-2 must be given to every employee detailing accurately the wages and deductions for the previous year.

Errors in Calculating State Unemployment Tax

9.

The exact amount of state unemployment tax must be paid on time to prevent loss of federal unemployment credit.

Not Considering Other Laws

10.

Constant legislative changes must be taken into consideration while preparing payroll to avoid penalties.

Payroll issues arise when managing payroll processing and core business processes becomes quite overwhelming for the in-house staff.

Invensis, an expert payroll outsourcing company, has an experienced team with deep domain expertise, to deliver outstanding payroll services and differentiate you amongst your business competitors.

Payroll Processing Services offered by Invensis include: Calculating paychecks and tax obligations based on employee time sheets Providing management reports Employee self-service features Time off tracking Pay Master Tax Liability Labor Allocation Accrual balances Wage Garnishment Administration services Custom payroll management services Checking stuffing/signing, printing and delivering checks W2 Forms and Tax returns filing Payroll Tax reporting Online benefits enrolment Pay register and many more…..

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To find out more about the services offered and benefits of partnering with Invensis, please contact us at sales@invensis.net