If you run a small business and have employees, you know the importance of payroll. You may also know how much time and effort it takes to get things right. Instead of focusing all of your energy on payroll, however, what if you used services and resources from trusted professionals like Daves Bookkeeping & Tax Services to eliminate the stress and guesswork?
Interested in learning more? Then you can start with these tips for avoiding payroll mistakes.
Using a Personal Bank Account
For those who are just getting started in business, it may seem convenient to pay employees out of a traditional bank account. This could be a huge mistake with major consequences for your business, however, if you decide to use your personal account rather than a business bank account. Here are some reasons why:
Without a business account, you’ll need to track expenses on your own.
You open your personal finances up to liability in the case of mishaps.
- You’ll miss out on essential business bank account features you need like payroll integration, cash flow projections, instant deposits and high-yield interest rates.
Failing to Protect Payroll Systems
Right now, there are criminals lurking online looking to hack into your payroll. According to the FBI, attacks on payroll resulted in losses of “$8.3 million dollars” from 2018-2019 alone. Otherwise known as payroll diversion schemes, these attacks target your employees and employee email systems to gain access to sensitive information and steal from your accounts.
So what can you do to protect your payroll systems? You can start by conducting routine security audits and securing your company’s email. Properly educating employees can also help, but payroll services can take the risk out of processing your payroll to begin with.
Forgetting to Take Out Taxes
Another frequent payroll slip up for small businesses is withholding too little or too much from employees’ paychecks on a regular basis. Failing to do so could land your business with penalties and fines, while making tax preparation a nightmare for your staff members.
It’s also critical to choose the right classification for everyone who works for your small business. This may sound pretty straightforward, but the IRS rules for contract vs. regular employees are pretty complex. You don’t want to get it wrong.
Failing to Pay Employees Overtime
Do you know whether your state requires businesses to pay overtime to employees? Most states legally mandate that overtime be paid when a regular employee works over 40 hours in a single week, although some states have no requirements. Unpaid overtime in these states could result in severe penalties for your small business.
Even if your state doesn’t require it, paying overtime and adhering to other payroll principles is important for protecting your reputation as a business owner. The last thing you want is for your business to become known for unfair wages and labor practices. So if you’re not aware of current labor and payroll guidance in your state, educate yourself or look into payroll services.
Your employees count on you to get payroll right. They rely on their paychecks to cover rent, bills and other living expenses. The long-term success and stability of your small business can also be impacted by whether you put the time and effort into avoiding some of the most common payroll issues and mistakes.
Instead of leaving your payroll up to chance, save yourself time, worry and stress by working with Dave’s Bookkeeping & Tax Services to handle your payroll, accounting, expense tracking and other routine accounting operations.
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Thanks in advance for considering!