Payroll Managers put their companies at risk each day simply by not being fully versed and up-to-date on rapidly changing workplace rules and regulations. Could you unknowingly be putting your company at risk? Below you'll find “The Mistakes That Payroll Managers Hate to Make.” Learn them, know them, live them.
1. Misclassifying nonexempt employees
Employees classified as nonexempt must be paid overtime when working more than 40 hours in a workweek. If you incorrectly classify an employee as exempt, your organization may be subject to wage and hour audits, penalties and evev lawsuits.
What can you do? Make sure you are on top of any changes. Consult the current guidelines and make certain you understand and correctly apply the rules when classifying exempt employees. Or, better yet, turn these headaches over to PayPro.
2. Failing to apply the latest laws and regulations
In just the past few years, many Federal laws have significantly changed the rules regarding payroll. Failing to implement portions of these acts can cause you to over-withhold Federal income tax, underpay state unemployment taxes, erroneously cease child support withholding, or incorrectly calculate fringe benefits when reporting an employee’s income.
What can you do? Stay up to date by reading professional journals and/or enrolling in continuing education courses. Or, let PayPro do it for you.
3. Incorrect Social Security numbers on W-2 forms
Incorrect Social Security numbers are the most common cause of erroneous W-2 forms. Not only can this result in a $50 penalty for each incorrect form, but the employee’s benefit record at the SSA may be understated, reducing his or her benefits in the future.
What can you do? Go to www.ssa.gov/employer/ssnv.htm and register to use the Social Security Number Verification Service. Then make it a standard procedure to check the Social Security number and name combination for each new employee. This is standard operating procedure for PayPro.
4. Incorrectly processing wage garnishments
Garnishments, levies and child support orders can be difficult to implement, especially when employees have multiple wage garnishment orders. You a Payroll Manager are responsible for tracking and prioritizing each employee’s wage attachments to make sure you withhold and remit the deductions correctly.
What can you do? Make sure you are up to date on the requirements, or, let PayPro's experienced staff handle it.
5. Improper tax reporting of fringe benefits
It doesn't seem quite right, but holiday gift certificates, prizes given at company parties and other gifts are defined by the Internal Revenue Code as taxable unless explicitly stated otherwise. If you fail to report these as income and under-withhold the taxes, your organization could be subject to penalties.
What can you do? Worry about keeping yourself up-to-date on the rules for all taxable benefits. Or, let PayPro do it.
6. Wrongly treating employees as contract workers
In an attempt to keep head count low, many companies hire temporary, work-at-home, or freelance workers. But unless specific conditions are met, the employer will still be responsible for reporting and paying their employment taxes. Failure to do so could leave you liable for back taxes and penalties.
What can you do? Make sure you are well versed in the definitions and reporting requirements for employees vs. independent contractors. Or, ask PayPro. You'll get the advice you need.
7. Missing a deposit deadline
Your deposit requirements are based on the total taxes reported on Form 941. Once your deposit schedule is determined, you must meet it or be subject to tiered compliance penalties based on how late the past-due amount was deposited.
What can you do? Turn your payroll and work comp headaches over to PayPro and turn your focus to the tasks that actually create revenues for your company.
