subject: Common Payroll Forms Reporting Errors [print this page] When choosing to handle payroll internally, many business owners fail to take the difficulties of processing payroll themselves into consideration. Making any of a number of common payroll forms reporting errors can negatively impact your company. You could potentially lose valued employees or, even worse, your company could run afoul of tax laws, and end up paying large amounts of money in penalties.
It is a fact that a large percentage of small businesses end up paying some sort of IRS penalty every year. Many of these penalties are due to errors on tax forms, where a transcribed number or two can end up costing your company thousands of dollars. Tax management is an area best left to professionals. Allowing a company that is familiar with the constantly changing world of tax laws to handle your payroll can save you a lot of hardship in the long run.
While running afoul of tax laws can negatively impact your bottom line, there is another common payroll error that can kill productivity and potentially cost your company just as much money. It is not uncommon for a small business owner to be in a rush to get payroll finished. When in a hurry, it is easy to make mistakes on payroll.
If you underpay your employees, it can greatly impact trust and morale, even after you rectify the situation. Make too many mistakes, and you run the risk of employees losing patience and leaving your company. If you overpay your employees, you run the risk of it not being reported, and you will end up paying out more money than was necessary.
Another common payroll reporting error is failing to withhold enough wages to cover taxes from each employee. Figuring out the right amount to withhold for local, state and federal taxes is difficult at best. You also have to make sure your employees are correctly classified, and that you're taking out enough to cover Social Security and Medicare. Keeping track of this accurately can be an issue, even for the most organized small business owner.
Forgetting to record checks is another common payroll error. When there is a mistake on payroll, small business owners will sometimes issue a paper check in the correct amount to the employee. Forget to record a paper check or two and your books can be off by thousands of dollars. When you use a payroll company, they handle the release of checks so trying to remember to record paper checks is a thing of the past.
Hiring a good payroll company can go a long way towards eliminating these common mistakes. In the long run, it can save you money and keep your employees happier.
