25 most common payroll mistakes to avoid: small business tips
TRANSCRIPT
1 Payroll is one of the most important functions of running a business.
In today’s world, employers must be well-versed in labor law, tax
law, benefit guidelines, compliance procedures, and other
payroll-related regulations.
2 Without the proper tools, resources, and systems in place an employer may
encounter diff icult situations that could lead to hefty penalty fees or legal action, or both.
In the end, employers must avoid making
as many mistakes as possible by creating suff icient policies and
procedures.
Using inaccurate employee Social Security numbers by not validating them with the Social Security
Administration (through E-Verify) after collecting new hire paperwork.
4 Mistake #1
Using incorrect tax rates when calculating employment tax, unemployment tax, and workers’ compensation.
5 Mistake #2
Misclassifying employees as exempt workers vs. nonexempt workers,
creating issues with minimum wage and overtime requirements.
7 Mistake #4
Forgetting or neglecting to pay FUTA (Federal Unemployment Tax) and/ or
SUTA (State Unemployment Tax).
11 Mistake #8
Neglecting to keep adequate records of disbursed paychecks and direct deposit confirmations.
14 Mistake #11
Neglecting to subject vendor payments (for
Independent Contractors) to backup withholding
requirements when necessary.
16 Mistake #13
Neglecting to have employees complete Form W-4, Form I-9, benefit enrollment forms, and other documents to process
payroll correctly.
23 Mistake #20
25 Mistake #22
Neglecting to retain employee records, payroll records, and payroll tax returns as suggested by federal
and state law.
26 Mistake #23
Neglecting to assign or hire a competent and
trustworthy payroll processor to handle
payroll duties.
28 Mistake #25
Not taken into serious consideration that your
business could undergo an IRS audit at any time.
Avoid making unnecessary mistakes and process payroll with confidence with the
help of these quick and dirty guides!
29
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