Mona Murahwa | Founder | Accurate Payroll | mail me |
Keeping your business finances in order needs a proper payroll system to avoid mistakes that come with payrolling. Whilst many small businesses opt for manual payroll processing spreadsheets or other basic tools that seem less cost-saving, they add on to more risks as the business expands and you add more employees to your payroll.
When it comes to running a business, there is no formula to avoid mistakes, but there are better steps to help you in solving those mistakes when they occur. The most common mistakes businesses struggle with are leaving gaps for fraud, losing track of leave days, and getting travel allowances wrong amongst others.
With this article, I share tips on how employers can be alert and minimise business payrolling mistakes.
The first thing is providing your business with a good payroll solution that automatically helps you to stay up to update with changing regulations, and stays in the loop with employment laws.
Good record-keeping
This means maintaining accurate records of the business and employees for compliance. Record-keeping makes sense when you use payroll solutions designed to ensure accurate and compliant storage that helps in regulating and protecting the confidential information of employees and it generally makes sense for growing businesses to automate the process of using technology from a software or a payroll service provider.
Payroll accuracy
Human error is a major cause of payroll inaccuracies, which can lead to employee dissatisfaction and compliance penalties.
Always be aware and careful of under or overpayment mistakes. Most employees don’t like to be placed in a situation where they experience faulty payments leading them to be underpaid or not paid and even to be asked to return money if they’re accidentally overpaid.
As a business, if you don’t discover an error payment early, that type of error can complicate the year-end accounting and other processing year-end processing which will be time-consuming to do corrections the following year.
It is relevant to have automated solutions that can help by reducing the chance of manual data entry on calculation errors when an error payment is discovered.
Payroll fraud
Is a serious threat to businesses, such as an employee falsifying a timecard by entering excess overtime or a higher-paying shift.
Timesheet signoffs and expense audits are standard solutions. Fraud can be easier to spot with payroll solutions that enable you to quickly run reports and analyse data for suspicious trends and outliers.
Back-up systems
You don’t need to be a payroll expert to understand the scale of the disaster if the system fails and there is no good backup.
If you run the payroll on in-house systems, consider keeping backup data or an entire replicated system in another physical location to protect against problems like fire or theft. If you use a cloud-based payroll system, your data should be backed up automatically in the cloud – but make sure you use a provider with a good track record.
Misclassification
Managing changes, even minor changes to employee information can cause payroll problems, if an employee moves to a different tax jurisdiction and you don’t update their address correctly, you may calculate tax withholding incorrectly, for example, payroll solutions that include self-service capabilities can help, enabling employees to update their information and relieving the burden on.
