Top Payroll Issues that May Doom Your Business in 2019
Businesses fail all the time and there are several issues that cause those failures. It’s a fact that payroll in the year 2019 may be the one that comes back to bite a business that it never even considered a risk area unless it takes action now. However, one way to mitigate that risk is use workforce management software and integrated payroll service. It’s a fact small businesses normally fail in year 1 to the tune of 25%. The top reason businesses fail is due to payroll issues. Managing payroll well can reduce cash flow problems and give businesses a better chance at succeeding for the long haul.
Payroll services vary from company to company. There are several payroll service providers offering payroll processing that offer more than just straight forward payroll processing. Several of the primary reasons payroll services are really great for small businesses is because it’s easy, eliminates the hassle and it gets payroll done on time. Companies rarely have the experience and knowledge needed about payroll taxes, payment profiles and the expertise to do it right. Payroll tax mistakes can be costly and they have caused the downfall of many companies. Payroll should never be a worry for employees. If it is a problem, employees panic, work slows down and many times employees start looking for work elsewhere.
Payroll periods never get missed when you use a professional payroll service provider. The only requirements to meet your companies payroll period are staff hours worked and making sure necessary funds are in the bank to fund the paychecks being disbursed. Using a 3rd party payroll service will help you run payroll properly, but you have to make sure you provide correct employee information from the beginning. The best way to make sure correct employee information is in place is to combine outsource payroll services with workforce management software. Workforce management software is used to record and track company staff attendance and hours. Both your payroll services provider and your workforce management software need to be compatible.
Find a workforce management system that includes the important components of attendance, time, scheduling and document management. It is wise to find a system that can be done from mobile device and includes employee access that is self-service. Both of platforms working in tandem can help you run your business more effectively. Listed below are the payroll issues that must be avoided at all costs or they may doom your business:
It is a fact that without cashflow your business can fail very quickly. Payroll doesn’t get paid, or it’s late. Company’s delay paying payroll taxes which puts the company in the crosshairs of the tax collectors like State Taxation and Revenue and the IRS. Overtime and overstaffing can break a business in half and destroy it. That is why payroll services and workforce management software is a critical tool most businesses should put in place. Managing payroll and staffing through these tools can help a business manage cashflow so much better than doing it manually.
- Employee Classifications Errors
Employee classification errors are a regular payroll mistake. It’s so easy to prevent, but it’s a regular reason for business’ doom.
Business classifications are as follows:
- Exempt salaried
- Non-exempt, hourly
- Independent contractor
Non-exempt get overtime, exempt do not earn overtime and contract employees are just that, on contract. If an employee is not classified properly non-compliance can turn into huge fines or penalties. Mistakes occur mostly regarding complicated classifications. The main factors that impact proper classifications are job duties and relationship status. Workers getting a salary doesn’t negate having to pay them overtime. Trying to avoid big pay expenses can lead to big trouble. Companies are smart to hire a professional payroll service and do employee classifications the right way.
- Record Keeping for Records For Audits, Payroll Documentation and Future Issues
A bad audit and an ensuing lawsuit can destroy a business. This is particularly the case if you’re not ready. Setting up a system that collects and maintains your company’s payroll records can protect your business from regulatory fines and penalties, employee allegations and real life audits. Workforce management software is a built in automated component and it is works 24/7 365 days a year. You can use it to manage your business, respond to employee allegations regarding payroll. Employees are able to self-manage due to login capability to review their own hours and records. This relieves managers and improves work place efficiency. Additional historical work records are stored and backed up in the cloud giving companies the information need to improve the company regarding a variety of work subjects.
- New and Existing Employment & Health Care Laws And Staying in Compliance
Compliance is not a proverbial piece of cake, it’s complex to say the least. This has been the case for 50 years or more and it is not going to change. New business owners have to begin the process of being an employer with a mind set of starting and then staying in compliance with respect all labor and insurance laws. There are regulations for a large portion of business subjects and payroll is number one without a doubt.
Payroll addresses the following important sections
- Fair Labor Standards Act (FLSA)
- Affordable Care Act (ACA)
- Payroll Based Journal (PBJ)
- Family Medical Leave and Fair Scheduling Laws
- Union Agreements
- Industry-specific Regulations
- Regulation Covering Non-U.S. citizens Employees
Fines are applied to businesses from small businesses to large corporations by regulatory agencies. It’s hard to fathom, but big companies and small businesses may be required to pay fines that doom the company. Many companies are subject to a variety of laws due to the state it’s located in or location in a particular state. Due to these issues it pays literally to hire and use a payroll service provider.
Cloud Record Maintenance with Workforce Management Software Services
Companies are able to develop and manage all their payroll and employee compliance records using a workforce management software service. Fines are real and nothing to sneeze at. Well-kept payroll and personnel records are worth their weight in gold because record keeping is maintained automatically. Additionally workforce management software helps company manage people, pay and the company more effectively using its built analytical tools and reports.
- Payroll Input Mistakes
People makes mistakes inputting numbers. Here are a set of input mistakes made all the time:
- Wrong hours are written down by staff on old school timesheets
- Misplace time cards
- Clocking out on the company time clock gets forgotten
- Employees forget to clock out or clock in from their mobile device
- Managers and company supervisor neglect tracking staff over time.
- Data entry errors by human resources and staff
One Error Translates Into Several Errors, Expenses and Time Lost Going Forward
One input error can cascade into multiple errors adding up over and over. Inputs done incorrectly directly impact payroll taxes and withholding for social security taxes. A short paycheck is a very bad thing from an employees perspective. Fixing it on the next check or immediately can be complex, depending on the complexity of the person’s wages and payroll or commission structure. Errors can be human and sometimes the errors are due to fraud. Staff can add hours the didn’t work and managers reduce hours to meet company goals. Big mistakes our purposeful paycheck errors can end up in a company paying giant fines.
Time Element of Payroll Mistakes
There is a domino effect when there is payroll error or there are payroll errors. Payroll has to fix every component of the error and they have to meet with all concerned of affect employees and their manager to determined what actually happened, what the true case is and how to fix it. The time it takes to resolve the problem can be immense and it ends affected the company from a variety of aspects including hours spent fixing it, employee productivity and potential fines that have to be paid due to non-compliance. Big fines can doom a company.
Payroll services and workforce management software combine together can solve the issue and put a system in place to reduce the chances of it happening in the future.
Manage Payroll Well and Improve Your Chances of Running a Successful Company
When cash is tight it means you really have to run payroll for your business like a Swiss watch. Observe your payroll numbers to make sure you’re not spending money on payroll needlessly and make sure you’re making the most of every penny. Using integrated workforce management software and payroll services will give your company, its managers and your employees the tools to run the company well, get paid on time and to stay in compliance.