As a small business owner, it’s easy to fall behind on your payroll responsibilities if you don’t have the time to stay on top of everything yourself. This is especially common if you are just starting out and are learning as you go, or if you are facing some more pressing day-to-day issues that require your attention. Here are some of the most common payroll issues that small businesses run into, along with tips for preventing them from happening in the first place.
1) Are you doing everything by the book?
One way that businesses pay into their workers’ pensions, Social Security, Medicare, and unemployment insurance is through payroll taxes. However, when employers are not paying in enough or paying in too much for multiple employees in a single year, it can trigger an audit by government agencies. The consequences for not meeting your payroll tax responsibilities include heavy fines and penalties. To avoid common payroll mistakes, you should make sure you’re doing everything by the book…
2) Do you have all your information ready?
The first thing you need to do when starting your payroll makes sure you have all of your employee’s personal information. This includes their name, address, social security number, date of birth, and more. The last thing you want is someone collecting a paycheck under someone else’s name! Now once you have all of your employee’s information, make sure it stays current.
3) Are you actually getting paid on time?
One of the biggest issues that small businesses face when it comes to payroll is actually getting paid on time. You do all of your work for them, follow their procedures, but what happens when you’re not paid in a timely manner? It can seriously mess up your business if you’re not getting paid in a timely manner. Just because they’re bigger than you doesn’t mean they won’t hold up on payment due dates. They might be holding out hope for more work down the road so it might be an option for them to keep your income without paying it back right away. With the help of right payroll management system, This problem can be easily solved.
How Poor Payroll Management Can Affect Your Business Adversely?
4) Is everyone logging their hours correctly?
It’s important for you and your employees to be completely transparent when it comes to payroll. Fudging hours is a serious issue in terms of legality and accuracy, not only with clients but also with tax authorities. If you’re running a small business, you need complete visibility into your employees’ hours.
5) Are employees submitting their vacation time off?
The first thing you’ll want to do is check with your employees. If it turns out they aren’t using their time, make sure you know why. It could be a cultural or language issue, in which case you might need to adjust your policy. If nobody is taking vacation time off, talk to them about their priorities and whether they believe there is a better use of their time.
6) Are you paying your taxes correctly?
Taxes are due by April 15th every year. Being late on your taxes can be costly, but it’s also a good idea to pay attention during tax season because you could be missing out on some valuable deductions and credits. Schedule time with your accountant, sit down with last year’s receipts, and get informed before filing. You’ll be glad you did come tax time!
7) Are you being hit with employment tribunal claims?
Employers can be held liable for employment tribunal claims even if they have paid out their workers correctly. Make sure you’re aware of how much you’re being fined so you can deal with these issues quickly. There are several reasons why your business might get hit with an Employment Tribunal, but most will boil down to not paying employees on time or misclassifying them in terms of their role. Ensuring you’ve got good payroll records in place is key to ensuring nothing slips through the cracks when it comes to dealing with HMRC and HMRC fines related to failing on payroll issues, so make sure you keep everything up-to-date and accurate at all times.
8) Have you done everything legally right when firing someone?
If you’re a small business owner, then you most likely have had an employee leave your company at some point. Don’t forget that a fair amount of legwork is required before making a decision on whether or not someone can stay with your company. It isn’t simply a matter of giving them two weeks’ notice and sending them on their way. Rather, it is crucial for employers to ensure they have done everything legally right when firing someone.