4 Common Payroll Mistakes and How to Fix Them

Organizing, sorting, and managing your payroll is one of the most important aspects and tasks of running a business because if you don’t pay your staff properly, you’re going to run into a lot of problems. These can both be legal problems and problems with staff morale and satisfaction. None of them are positive.

However, despite the importance of an effective payroll system, the chances are you’re still going to run into problems from time to time, but as long as you’re working on fixing the main ones, you should be in good stead to have an effective department. Today, we’re going to focus on four common problems you can fix right away, right now, hopefully resulting in some happier staff.

  1. Make Sure You’re Paying Equally

You’ve probably heard a lot of talks and change over the last few years regarding the topic of equal pay, which means paying men and women the same amount of the same job, as well as playing different races and ethnicities the same pay. However, what counts as an equal job can differ from company to company, especially if you have similar jobs within your business.

The best way to address this issue is to go through all the jobs in your company and find which ones are similar, regardless of who is working them. Then you can organize a pay structure that your employees will slot into, ensuring you then go through the list to make sure everyone who falls into each slot is paid the same.

  1. Label Your Staff Properly

More and more people are working for businesses as freelancers and contractors, and it’s essential to make sure you’re labeling your staff on your books properly so everything is registered correctly. For example, freelancers aren’t’ entitled to holiday pay and overtime, but labeling them as employees does.

Between 2015 and 2020, over 1.3 million cases opened up in the US alone, with unpaid wages and unpaid benefits because employers were labeling employees wrong. Go through your books and make sure you’re doing it right.

  1. Miscalculating Taxes

If you make this mistake, it can be a very costly and time-consuming mistake to put right, so you’ll want to try and get it right the first time. You need to make sure you’re paying Federal Unemployment Taxes, Federal and State Income taxes, and FICA taxes (if you’re in the US) for each employee and ensure you’re paying the right amount each time.

To ensure this is correct, make sure you’re using an accountant or accounting software to calculate the right amount you need to pay and make sure you’re thinking about putting more aside in your company budget to actually afford the payment in the first place.

  1. Not Being Organised

Most problems with payroll departments come from a lack of organization or a blip when it comes to departmental communication. Get organized with how your payroll software works. If you can, move to a digital format that’s secure and easy to use, and utilize features that can help you keep everything in check and all data as up to date as possible at all times.

Summary

Running and managing your payroll department and systems doesn’t have to be complicated, but it does require you to pay it some attention and some love to make sure you get it right. If you can develop and encourage a proper system, then you could be massively decreasing the risk that you’re ever going to experience a problem.

All opinions expressed on USDR are those of the author and not necessarily those of US Daily Review.