For an employer, payroll is one of many important responsibilities they must manage. However, payroll can be even trickier and more hazardous than many other administrative processes. Why? Here are a few reasons that every small employer must work hard to get payroll correct.
1. Payroll Errors Affect Employees Directly
As an employer, you want to retain quality employees and keep expensive turnover to a minimum. You also want a happy and productive workplace. Payroll errors and delays can easily damage your relationship with current employees and create a bad reputation for your company among potential workers. Employees are very sensitive about mistakes that affect their wallets, so even small issues will be magnified in their eyes.
2. Responsible Staff May Be Liable
Did you know that business owners, management, and other people responsible for your payroll can be held financially liable for unpaid taxes? As with some other forms of taxes, those who are tasked with remitting payroll taxes (both withheld from employees and the employer's portion) may be expected to pay these if the company does not. So, diligent management and correct payment protect you personally.
3. Fixing Payroll Problems Can't Be Delayed
The more issues you have to fix within your payroll process, the longer it will take. Because payroll cannot simply be delayed or put aside when things aren't working well, you must devote extra time to finding discrepancies, fixing errors (including employee errors), correcting forms, and cutting new checks. All of this costs labor dollars and takes time away from other parts of your business.
4. You're Accountable to Various Agencies
An employer is accountable to a number of different oversight authorities. This includes state labor boards, federal labor rules, state and federal taxing agencies, and city and county industry agencies. You could be audited at any time by any of these. You may have to defend your payroll practices if employees file complaints, and your reporting forms will be scrutinized. Errors, omissions, and discrepancies will get your business in trouble.
5. Payroll Calculations Are Hard
Finally, you must be diligent about payroll because it's detailed and complex. There are many moving parts, ranging from time and attendance to tax calculations to bookkeeping and ledger entries. Everything must be right in order to come out with the right numbers, but this detailed math isn't always the strong suit of business owners or managers.
Where to Get Help
Now that you understand more about why payroll is vital to get right, where can you find help? Payroll service companies and accountants can provide assistance with as much of the process as you need help with. Get started by learning more about payroll services in your area today.