Common Mistakes while making the payroll
A smooth payroll process is very important for an organization; it is the lifeline of human resources. A good payroll system will keep the employees happy but any mistake occurring in the same will negatively affect the organization and can also cause legal action.
Here are a few mistakes mentioned which are made while making the payroll
Miscalculation of Working Hours
Every company has different rules for calculating the working hours for an employee and then paying the overtime accordingly. One should use the best policy available within the environment to calculate the working hours of the employee.
Bad time tracking capabilities can also contribute to the miscalculation of hours. If your company does not have a proper or a reliable system of calculation hours then chances of making a mistake in the payroll will occur.
Running the payroll late
Time is a very important factor in payroll. If the timelines are missed in the payroll and the payment/salaries are delayed, the employee will lose trust in the company, which is not a good sign.
If the payroll process gets delayed then the taxes related to it which needs to be submitted also get delayed which results in an additional payment of fees to the concerned authorities.
Therefore it is of uttermost important to get the payroll processed in time to make sure the internal and external payments are made on time.
Paying the wrong taxes
Tax rate changes over the year, the taxes might not be the same when you started paying the employee. Make sure the company check all the taxes before computing anything because the tax changes also take place during the year.
If you pay the wrong taxes, it might result in paying interest and fines to the state and the authority.
The taxes also depend on where are the offices located in the organization. The taxes and the policies differ from state to state and country as well.
Classification of workers
Some of the employees of the organization are permanent, the third party payroll and contractual.
Different type of salaries is paid to these employees. If these are missed then there would be miscalculation in the taxes as well which will create a blunder and result in payment of fine and maybe owing and taking back salaries paid wrongly to the workers.
Maintaining the payroll records can be difficult at times, the organization needs to maintain several documents for audit purpose. The authorities require employers to keep three years’ worth of pay records. These records include hours worked, payment rates, payroll dates, and more. While this might sound like a lot of data, some states require even more, with records dating even farther back.
Not only does this data keep your organization safe in case of future audits, it also helps you run payroll more smoothly here and now. Without complete, updated records, you risk miscalculating pay, misclassifying employees, and more.
In the end we can conclude by saying that the payroll is one of the most important features in HR and one should be very careful while making the same as it also results in employee satisfaction if done correctly. If we invest in perfect payroll then the company does not need to suffer later on.