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Costly Payroll Mistakes Made by Mid-Market Companies

Mistakes happen at any mid-market company, but when it comes to payroll, these mistakes can be extremely costly. Just one small error could result in the loss of thousands of rupees, along with employees’ time and energy when they attempt to fix the problem.

Thankfully, if you learn about these mistakes, you can avoid them in the first place. Here are some costly payroll mistakes many mid-market companies make, as well as tips you can follow to ensure they don’t happen with you.

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Not having a salary structure in place

Looking at the overall plan for your payroll and setting up a salary structure for your employees is critical. Creating a salary structure once is not enough; you need to update salary structures on a regular basis and analyze whether you’re paying employees the right amount.

For instance, if you’re paying too little, you’re not going to be able to attract and retain talent, and if you pay too much, you’re going to put yourself out of business. Looking at the health of your business, your employees’ salaries, and current labour market conditions once a year – or at least once every few years – is going to ensure that you’re not making any costly mistakes.

Misclassifying employees

Your company may hire full-time, salaried employees, along with seasonal, part-time employees. Some employers may purposefully misclassify what should be a full-time employee as an independent contractor in order to evade paying out benefits, worker’s compensation, and unemployment.

If discovered, this could lead to a costly lawsuit for an employer. It recently happened to Uber, which expected to pay $146 million to $170 million in settlements because of misclassification issues with their workers. Making sure that your company is correctly classifying your employees and following the law is going to save you from a massive headache in the long run.

Failing to add or remove employees from benefit plans

When you hire new employees, have they added to the benefits system right away, or after a short trial period? Once they quit or are laid off or fired, are they taken off benefits immediately? Decide how soon you’ll enroll and remove employees from benefits plans and make sure it is done in a timely manner. Otherwise, you’re either not properly compensating your employees or you’re compensating former employees who don’t deserve it.

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Making data entry errors

It’s only expected that humans will make errors sometimes. But when it comes to data entry input for your payroll, these errors can be expensive. Having HR double-checks their work as well as call up the IRS to verify employees’ names and social security numbers is crucial when hiring new employees.

Not following compliance laws

Compliance laws can be confusing and can be changed at a time to time. You can end up costing you money if you aren't at the forefront of these improvements or changes. Compliance covers issues such as tax reporting and deductions, guaranteeing the eligibility of employee’s to work, keeping with the rules & regulations on salaries and hourly wages and maintaining promises.

Additionally, you need to ensure that you comply with the law on overtime, and you pay the minimum wage at least and have all the payroll reports on paper for a period of a minimum of 3 years. To order to ensure that you are fully compliant, the HR department should be known to these laws as well as of the whole rules of the Fair Labor Standards Act.

Not sending in paperwork at the proper time

You have to ensure that you stay on schedule with regards to your taxes while handling payrolls. Late sending of your documentation will lead to large fines, particularly if you have many employees in your company. For example, as you turn to 1099 late, if you have to send fewer than 30 days late, you will have to pay $50 per late form and $100 per form if more than thirty days late. Keep up with tax deadlines and get it all before the due date would save you in a great deal.

Now that you are aware of the costly payroll failures to stay away from, please ensure that you have the strongest HR department and tools are in place. Only then can you guarantee that your payroll operates effectively.

By outsourcing your services to KVB Staffing Solutions, you are free to focus on your core business without any distractions. For any query mail us on info@kvb-group.com or visit: http://kvb-group.com/web/home/
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