Everyone makes mistakes but payroll mistakes can have some serious effects on the bottom line of a business. Over paying taxes and employees, not prioritizing training, and time clock errors are just a few ways that businesses leave money on the table when tax time comes. When it comes to avoiding losing payroll money, identify and avoid these five common payroll errors.
1. Ignoring Training Needs
Finance isn't a stagnant field. Tax laws are always evolving and changing. What was taxable last year isn't necessarily taxable this year and organizations that don't keep their staff current on finance laws risk hefty tax fines and audits. When organizations fail to consistently train and update their staff, they also risk missing important tax information which may lead to decreased taxes or unearth deductions for expenses the business is already incurring. Organizations need to ensure that finance staff receive timely and frequent continuing education opportunities to stay up-to-date on laws and regulations that affect their business' bottom line.
2. Over Payment
Over payment is one of the common payroll errors that may seem innocuous but has some serious financial ramifications. Whether it's withholding too much in taxes in fear of an audit or over paying employees for work not performed, by erring on the side of caution, finance employees actually cause more harm than good. By regularly auditing payroll with an unbiased third-party vendor and educating finance employees to be more confident when withholding earnings, businesses can ensure they pay exactly what is owed.
3. Time Clock Errors
Time clock errors are one of the common payroll mistakes that can be easily eradicated. Automated time clock systems remove intentional errors, interpretive errors, and transcription errors which works to reduce payroll costs. The ability of managers to manage and monitor time clock punches allows employee attendance issues to be addressed immediately rather than when they're identified by payroll. Automated time clock systems also free up time spent by finance auditing and correcting payroll information. Time clock errors are a surprisingly common payroll error that can be easily treated with automation.
4. Human Error
Human error is one of the common payroll errors that can be easily remedied with automated time clock systems and payroll software. By implementing automation, finance employees can focus on the tasks that require their expertise rather than worrying about whether the decimal point is right or if an employee really meant to clock out at two. Automated software decreases human error and also outright fraud. By reducing human error through automated systems, businesses can decrease this payroll mistakes.
5. Not Learning the Software
Tax software can be an organizational lifesaver but some of the most common payroll mistakes occur when a business blindly trusts their software without understanding its true function. While payroll software decreases human error, it isn't infallible and, as they say, garbage in, garbage out. Businesses that don't prioritize learning their software don't truly understand the service and can misuse the software unintentionally. Make sure all finance employees are up-to-date and receive regular training on payroll software to make sure it's being used to its full potential.
Payroll may be a routine task but that doesn't mean it's not a great place to identify missed opportunities in the form of financial losses. By recognizing common payroll mistakes, businesses can take steps to avoid costly errors. If you want to improve your bottom line, looking for payroll errors is a good place to start.