It’s easy to mistype data when you’re manually entering time records into a payroll system by hand. If you’ve made payroll mistakes in the past, you’re not alone. Studies by the American Payroll Association show us that approximately 40% of business owners make payroll mistakes annually. This results in an average of $845 in IRS penalties every year. In order to avoid this, many business owners have invested in online time tracking services that calculate records automatically. This type of software transfers your employees’ time records to payroll and accounting software platforms with ease, avoiding the need to enter time manually. If you’re manually entering data every pay cycle and you’ve made a payroll mistake, you might wonder how to handle it and, more importantly, when you need to handle it. We can help.
Category: Accounting & Payroll
Running a business takes a lot of time and energy. For small businesses, doing your own billing and payroll might be the way to go, but what about a growing business? When business is booming, you don’t want to spend time keeping your books up to date, processing payroll, entering tax write -offs, or searching for missing tax information. You want to focus on the future of your business, rather than dealing with paperwork. This is why business owners are hiring payroll experts to take care of their financial needs.
Payroll is one of the most important aspects of business– it builds financial stability among employees and boosts team morale. Many businesses, especially small businesses, tend to take payroll into their own hands and avoid outsourcing payroll. Managers and business owners spend hours calculating everything themselves, often times juggling other roles in the business at the same time. Taking care of your own payroll works when your business is just starting out, but this should be avoided when the business grows.
Once business is booming, it’s wise to bring in a payroll expert to make sure that you save yourself time, headaches, and money. This will allow you to focus on the growth of the business rather than worrying about whether or not your employees are going to get paid on time. Additionally, without a payroll expert, there’s a chance that you can make a mistake. Mistakes can lead your business to legal penalties, so getting some help might not be a bad idea.
Employee payroll needs to adhere to a regular payroll schedule. Employers can’t just pay their employees whenever they get paid from their clients and they can’t postpone payroll because they ran into a big expense. However, while you do have to stick to a schedule, you can announce your plans to close payroll early so that employees get a check in time for the holidays.
Making a payroll mistake could mean getting reported to the Department of Labor. It could mean that you’ll get sued, fined, ordered to pay back wages, and forever fear the DOL. It’ll be an ugly mess over an honest mistake, right?
Well, not necessarily. If employers honestly try to follow the rules and don’t deliberately try to reduce overtime, the DOL may be lenient with a payroll mistake. At least that’s how it has appeared in a recent case.
Offering employees the choice between comp time in place of overtime is a benefit that the public sector has but the private sector does not. The benefit allows employees to choose between getting paid overtime for hours worked over 40 in a week or getting one and a half times the overtime hours added to the employee’s comp time balance.
The benefit is appealing to some employers and employees; some employers don’t want to pay overtime and some employees prefer time off to more money. There are groups that recognize this and are advocating to make this benefit widely available.
For the longest time, why anyone would use rounding in payroll calculations was beyond me. Since rounding is meant to even out in the end, what could possibly be the point? I don’t like unanswered questions hanging around so I decided to do some digging. I still don’t think rounding is a brilliant idea but at least I understand why it’s used. Essentially, rounding in the morning is meant to benefit the occasional late employee while rounding in the evening can benefit the employer. I’ll explain how this works.
Most companies can choose which payroll schedule they want to use, depending on the state in which they operate (check here for more info: payday frequency requirements by state). Four options are allowed in the US, including: weekly, bi-weekly, monthly, and bi-monthly. Each option has specific benefits. This payroll schedule infographic should help business owners get a handle on the right choice for their company.
A workweek has different meanings depending on who you talk to so it’s no surprise that business owners can get a little lost on the topic.
The common definition differs from the payroll definition, which makes it particularly difficult to sort out. But sort out you must, because when it comes to business the payroll definition is the one that counts since that’s the one used in wage and hour disputes.
Have you ever run payroll and found that your cost is much higher than expected? In some industries, like dental offices, for example, payroll costs should be consistent. If your same five employees come to work every day and work their set shifts, you should expect their payroll to be the same. If they use time off when they’re sick or when they’re on vacation, that’s the only time it differs (but usually your PTO policy will balance it out). Employees on a set schedule should obtain almost the same amount of hours every pay period, without any surprises.
Business owners are experts at running their business. But they probably are not trained in payroll and they probably haven’t studied federal and state wage and hour laws. This leaves room for quite a bit of error.
Messing up payroll is serious business. Payroll is a business’ largest expense and getting it wrong could mean facing an even larger expense. I’ll bring five of the most common payroll errors to the attention of these busy people so they don’t wind up in trouble for it later.
You can’t do business without calculations and one could argue that you can’t do business without calculators – after all, where would you get the time to run your business if you had to calculate everything by hand. Lucky for the nation’s small businesses, the internet offers tools of all kinds to help with everything from the most basic to the most complicated calculations.