Payroll pros know the danger of their profession. One wrong decimal point and you could be staring down the barrel of legal fines and litigation. Yet even the most careful payroll professionals can overlook some simple problems that cost your business money and productivity. Open the books and find out whether your payroll is being affected by these easy-to-miss problems.
Business moves fast and keeping compliant with firm deadlines is a challenge. One sick employee or unannounced inspection can put your payroll department behind on their duties. Missing deadlines is more than just an inconvenience though, it can also be expensive. Failing to file paperwork or provide information can cost money in lost revenue and fines. Review the last fiscal year to find which costs were associated with failing to meet deadlines and create a calendar for the coming year to prevent these losses.
Payroll is a 24/7 job with a constantly changing landscape. The changes in healthcare, employee classification, and salary requirements can be overwhelming even for seasoned employees, and missing one piece of legislation can cost serious money. If you don’t have your employees on the pulse of upcoming changes, you need to fix that now. Get employees more involved in local and national associations so they are empowered to help the business conform to new rules. Then, upgrade your payroll software to one that offers frequent updates to address new laws.
Human error is as intrinsic to payroll as it is any other profession. Despite constant diligence and careful tallying, so long as calculations rely on employees, there will be error. While it’s impossible to eliminate this problem, it is possible to minimize the risks. Automation can help your employees perform their job more effectively and provide redundancy to identify potential mistakes.
Poor Record Retention
How long are you keeping your records? The answer is probably not long enough. Failing to keep accurate and complete records is a problem many payroll departments only realize when it’s too late. Audits and lawsuits can happen anywhere from four to six years after the incident so retaining full records is pivotal to avoiding fines. Make sure that your payroll department has a system in place for filing and storing old records securely through the time required by federal, state, or local laws.
Incorrect Employee Classification
The days of all-exempt employees is rapidly coming to a close. With new legislation on the table to provide stricter regulations as to which employees can be exempt and which can’t, employers need to start reassessing their employee classification now. Many businesses unknowingly misclassify their employees and contractors and it can cause huge headaches in the long run. Each time a position comes up for hiring, make sure your payroll and human resources department sit down to look at the hours and the responsibilities of the position to ensure that the position is classified appropriately.
Even those with fantastic payroll employees can’t rest on their laurels. Keeping up-to-date with services and software that helps your employees do the best job possible is a must. To avoid these commonly overlooked payroll problems, start by allocating funds to your employees’ ongoing education and then start looking into workforce management software that can help them perform their job more effectively. By giving your employees the resources and support to properly perform their job, you can maintain a trouble-free payroll system and avoid these simple mistakes.