Avoiding Costly Payroll Mistakes
Everyone knows the business world isn’t perfect. And, business owners have learned the hard way that payroll management is not as simple as it appears. Managing a viable payroll system requires attention to detail as well as a sound understanding the tax laws matters to small and mid-size companies.
Payroll mistakes are like ants in the kitchen. At first, you see one or two, swipe them away and forget about it. But then the next week your kitchen is overrun with an army of them, which requires military action to eliminate them. In the same way, payroll errors may take months to notice but can also take up valuable time to undo.
Common Payroll Management Mistakes To Avoid:
1- First ensure that your records are accurate? Then check again.
2- Review all payroll data, cross referencing personal information – including wage and benefit information – for all active and terminated employees.
Verify Employee Input:
1- Before starting processing tax forms request that employees check their W-4 forms for accuracy.
2- This includes employees review their W-4 withholding forms, confirming that their personal information and their federal, state and local tax withholdings information is accurate. Give them a deadline to respond.
Know Current Laws and Rules:
1- Changes are certain almost every year, including recent one on contribution limits for 401(k) plans, HSAs, and other employee benefit accounts. Employers need to know about any legal changes or rules relating to payroll administration and deal with them before closing the books.
Adhere To Deadlines:
1- Confirm year-end payroll deadlines
2- Confirm federal and state deposit deadlines
3- Review the holiday processing schedule in January
Always Use Current Year Employment Tax Forms.
1- The IRS website provides ALL recent forms – 941, 940, 944 and 945 forms
2- Verify the deadlines for submitting each of these forms
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