I don't need to tell you that owning and running a small or medium-sized business is nothing but work, work, work (and then even more work). Whether you sell physical products or offer services, you've constantly got numerous balls in the air while simultaneously trying to attend meetings, answer the phone, reply to emails, solve supply chain issues, approve marketing concepts, and pay employees.
Thankfully, the days of haggard employees lining up weekly for a small fist full of silver coins are gone. Paying your loyal and diligent workforce with direct deposit is considerably more straightforward, but modernization isn't without its pitfalls. Here are a few common mistakes small, medium and even large businesses make when it comes to the sometimes murky (but predictable) world of payroll.
Paying the Correct Amount - This might sound easy to avoid, but the most straightforward tasks often result in the simplest mistakes. Double-check each employee's tax & wage information, this is especially true for non-salary or hourly workers.
Employee's Basic Information - This one goes hand-in-hand with #1, but again, we see it many times. A misspelled sir name or one digit off with the social security number can mean hours spent undoing the mistake for you and management. The old saying for carpentry goes; measure twice, cut once; well, the same goes for payroll.
Incorrect Classification - Independent Contractor or Employee? This mistake always pops up and can sometimes result in massive expenses, tax issues, and possible legal proceedings. Be sure to classify your workforce correctly. Independent contractors can be a valuable asset for many employers, but withholding taxes or medical coverage can be damning.
Failing to Maintain Confidentiality - Loose lips sink ships or, in this case, an entire workforce. Your company's payroll information is extremely sensitive and should be treated as such. No one should access this information outside upper management, HR, or the payroll department. Failure to properly secure your payroll details can result in actual damage not only to your company but to the lives of the people who work for you.
Not Paying on Time - This one is rare, but when it happens, everything has the potential to fall apart. Failing to pay your workforce on time can have two significant consequences, and neither is very good. The first is federal penalties and interest payments quickly followed by legal proceedings and lawsuits. The second is the evaporation of your workforce's morale. If employees even hint that payroll is delayed or won't be on time, the news spreads like wildfire, and the productivity you once boasted about to your golf buddies quickly grinds to a halt. Even if the mistake was a software error or simple oversight and is immediately remedied, the dynamic will change, and the same trust will likely never return.
The good news is that ShoreSource Business Solutions can help you and your business avoid these and many more business bookkeeping pitfalls. Set up an appointment today and learn how ShoreSource can work smarter so that you don't have to work harder.
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