5 Payroll Mistakes That Can Cost You

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Payroll can be complicated and hard to manage, especially when you’re just starting out and you don’t have all the information you need to calculate taxes correctly or keep up with all the new rules and regulations set in place by the IRS and other government agencies. The good news is that if you get payroll wrong, you can get in trouble with the government. Here are five signs it’s time to switch payroll providers and get help from an expert or onboard a payroll software.

1) Hire inexperienced staff

If you hire inexperienced staff, they may not have a sense of what’s expected of them at work and what it takes to succeed. Even if they’re full of passion and love their job, if you’re giving your new hire a trial period before officially offering them a position with your company, be sure to lay out their responsibilities from day one. Don’t hesitate to be clear about what it takes to do well in that role—and if you don’t give them enough training or attention as a result, let them go quickly so they can move on to a better fit. Hiring based on how much fun someone seems will only leave everyone involved frustrated and disappointed down the road.

2) Lack of Processes

Without proper oversight, small payroll mistakes can quickly compound and cause you to fall behind on taxes or payroll requirements. When you’re managing your own payroll, it’s easy to accidentally fail to pay employees on time or neglect giving them paychecks on days they worked. These might seem like trivial oversights at first, but they can have large consequences later down the line. For example, paying an employee three days late will result in not only fines from state agencies but also interest charges that could end up costing thousands of dollars. Make sure your team is following formal processes for everything related to payroll management—including depositing checks and making payments—to ensure errors are reduced or even eliminated altogether.

3) Slow Systems

When it comes to payroll processing, efficiency is key. If your current provider has a reputation for slow systems and inefficient tech support, you might be paying too much per transaction. A lack of tech support could also pose serious risks for you and your staff – making mistakes with payroll can cost you major penalties and fines from government agencies. And don’t forget: time is money – so it’s imperative that your system run as efficiently as possible to avoid unnecessary delays in your employees getting paid. Review these signs that it may be time to switch payroll providers

4) No Cloud Platform

Using a cloud payroll platform is important for simplifying your finances, but not using one at all can be just as detrimental. If you handle payroll yourself, you’re responsible for tasks like withholding taxes from employees’ paychecks, paying their employment insurance premiums, issuing them T4s at tax time, and more. Missing any of these steps could result in costly penalties—but if you’re not even sure how to address them, there are plenty of mistakes that might be made without your knowledge. By comparison, with an online payroll platform things are taken care of on your behalf—you simply update information on file and upload your latest W-2s or T4s.

5) Poor Marketing

If you have payroll, chances are it’s not worth what you’re paying for it. Surveys show that small business owners consistently overpay for poorly designed payroll services, often without realizing it. The problem is that if your payroll provider doesn’t help you market to new customers or provide exceptional service, then you’re making a major mistake by keeping them around. It should go without saying that if they don’t know your business, they can never market to your ideal customer effectively—and no one else will either.

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