Nibletz Staff
When you first started your company, and only had a handful of employees, making sure everyone got their slice of the profits was probably very straightforward. You did a simple bit of maths, made some bank transfers, and from there everything was in order. However, as your business grows and develops, you’re going to have to deal with a more conventional payroll system. To ensure you don’t drive yourself into any costly pitfalls, here are some of the most common mistakes which you need to avoid.
I’ll start this off with the one mistake you need to step around at all costs; missing payroll taxes. In the US, the government collects taxes on a “pay-as-you-go” basis. There are a wide range of state, local, and federal taxes which could apply to your company. If you fail to pay these in full and on time, it can be a massive financial blow to your company. The penalties could bankrupt you completely, and you certainly wouldn’t be the first! As a business owner, a disaster on this scale probably ranks among your worst nightmares, so make sure you’re avoiding it. When you’re more experienced with managing payroll, keeping on top of taxes will be a breeze. To start with, however, you should be using a modern bookkeeping tool or employing a commercial accountant for help.
On the subject of bookkeeping software, another big mistake you need to avoid is neglecting its features. Although they’re steadily becoming easier to use, a lot of business owners may find modern accounting software a little hard to get along with at the start. If you don’t hit the ground running with it, you may end up neglecting all kinds of helpful time-saving features. Automatic scheduling, for example, will ensure that all of your expense reports are emailed to the right people on time. Various email and dashboard notifications can be used to keep you up to date with the peaks and troughs your cash flow goes through. You can even get paper-based QuickBooks compatible checks, too. Take the time to properly integrate your payroll with your accounting tech, and you’ll quickly reap all kinds of great benefits.
Finally, listing an employee as a contractor, or vice versa. Employees and contractors are very different, especially when it comes to declaring taxes and workplace benefits. If you’re in the early stages and your business appears to be somewhat unstable, then hiring contractors may make a lot of sense to you, as the work is only temporary. However, with all these contractors and full-time employees making up your workforce, it can be easy to misclassify workers. During his presidency, Barack Obama pushed through an executive order intended to protect contractors from various labor law abuses. If you’re found to be committing these, the law will be far less forgiving than it was in the early noughties. Worker classification is a legal matter, not a preference. Make sure you’re doing it right!
Avoid these payroll mistakes, and you and your employees will have very little to worry about!
