Payroll mistakes can have a substantial negative impact on your small business. Each year, thousands of small businesses are fined hundreds or even thousands of dollars by the IRS due to payroll errors that could have been avoided. Because most small businesses can’t afford to throw such large chunks of change down the drain, it is important to stay vigilant to prevent these costly errors from occurring. Ultimately, the first step to preventing errors is recognizing what they are. Here are some of the most common payroll mistakes that small businesses make.
Failing to meet deadlines on payroll filings
When it comes to filing the payroll for your business, it is essential to be on time. If a payroll is processed late, you will likely end up with a hefty late payment penalty. You could even end up breaking compliance laws, which may land your business in legal trouble. Plus, you will likely upset quite a few of your employees in the process; this, of course, isn’t great for morale and could lead to higher employee turnover rates.
Handling payroll without help
Many small business owners like to handle as many aspects of their business on their own as possible. However, some tasks are better off delegated to professionals for the sake of your business’s success.
Because managing your business’s payroll is a highly time-consuming process that requires strong attention to detail, it is often worth investing in a quality HR department for your small business. Hiring an HR manager ensures that someone is on top of filing your payroll properly before the deadline while you focus on the many other pressing aspects of running your small business.
Data entry errors
Another common payroll mistake that small businesses make is inaccurate data entries. As previously stated, filing the payroll for your business requires extremely close attention to detail. If you are distracted by other responsibilities or rushing through the process to meet a deadline, it can be easy to input inaccurate data.
Common data entry errors that small businesses make on their payroll documents include inaccurately recording employee hours or matching an employee’s name to the wrong Social Security number. Such mistakes will likely result in large fines and penalties as well as delayed tax filings.
