Avoiding Common Payroll Mistakes

avoid-payroll-mistakes

KW: payroll service

There are some common mistakes that payroll service providers should avoid in order to prevent problems for their clients. For example, they should not replace paid time off with work time. Also, the reimbursements should not be included in the paycheck without itemizing the reimbursements, etc. Here are some additional recommendations if you want to provide your client a high-quality payroll service:

Pay Changes

If an employee’s by has been changed; regardless whether it has been a reduction or raise, the changes have to be applied.

Company Policy

Having a written policy handbook is very important, no matter how small your business may be. The handbook should include (in writing) details about the company’s guidelines, rules, procedures concerning payroll, etc. In case of a complaint, company’s policy is a best defense (if written carefully). For more info : http://payrollserviceaustralia.com.au

Gift Cards, Prizes And Awards In The Employees’ income

Most gift awards and prizes are regarded as taxable fringe benefits. Gift cards are considered as equivalent of cash, and therefore should be a part of the taxable wages.

Depositing Taxes

Depositing taxes should be done on a monthly basis. Once they reach a pre-defined amount, the taxes are to be deposited the next business day. In case the company fails to deposit the taxes on time, it can be subjected to late deposit penalties and interest.

Reimbursements

Payroll services provider has to pay attention to the following: excluding expense reimbursements from an employee’s salary depends on whether the employee is reimbursed according to an accountable plan. Expenses are reimbursed according to an accountable plan if there is a business link to the expenditure. In this case, here is an appropriate accounting of the expenditure, and excess reimbursement will be rendered to the employer. If the policy according to which the expenses are reimbursed does not meet the requirements, they are to be included in taxable wages. Click here.

Over-payments

Overpaying an employee happens sometimes so the employee receives a greater amount than the salary. In case this happens, payroll services provider should act promptly as it can cause problems for both accounting department and the employee.

Form 1099s

This form usually has to be issued to vendors and independent contractors providing more than $600 in services. If a company (or payroll services provider) fails to issue the form 1099s in a timely manner, it can face penalties.

Termination Pay

The pay for terminated employees needs to be levied appropriately. Overpayment will be unnecessary expense for your business, while underpayment will cause problems with the employee.

Classifying Employees As Independent Contractors

Classifying the employees is important, because the way the compensation gets reported to the IRS is depending on the classification made by the payroll service provider. Also, this will determine if the employee is entitled to the benefits (such as retirement plan, medical insurance coverage, etc).

Payroll mistakes can cause a large problem for a business so investing in payroll services and bookkeeping will keep you on the safe side, assure the accounting principles are implemented properly and your business can run smoothly.

Leave a Reply

Your email address will not be published. Required fields are marked *