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Common Payroll Mistakes and How to Prevent Them
Insight Solutions Group
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Understanding Payroll Compliance
One of the most common payroll mistakes is failing to adhere to payroll compliance standards. According to a survey by the American Payroll Association, 34% of businesses face payroll compliance issues annually. Ensuring compliance involves understanding federal, state, and local regulations, which can be complex and ever-changing. This is where the value of a PEO comes into play. A PEO can help businesses keep up-to-date with changing payroll regulations by providing expert guidance and resources. To learn more about how a PEO can help, visit insightsolutionsgroups.com.
Accurate Employee Classification
Misclassifying employees is another frequent payroll error. Whether it's confusing independent contractors with full-time employees or mishandling exempt and non-exempt status, these mistakes can lead to severe penalties. The IRS estimates that 10-20% of employers misclassify at least one worker. To prevent employee classification errors, businesses should:- Review job roles frequently
- Consult legal advice when uncertain
- Use appropriate software tools
Avoiding Payroll Processing Errors
Payroll processing errors can result from simple data entry mistakes to more complex software glitches. According to the National Small Business Association, 40% of small businesses face payroll fines due to processing errors each year. To prevent these mistakes, companies should implement regular audits, use reliable payroll software, and provide thorough training to payroll staff. A clear payroll processing checklist can also be beneficial. Consider the following steps:- Verify employee time and attendance records
- Double-check tax calculations and deductions
- Ensure timely submission of payroll
