If your small company does not have a designated payroll software small business, you’ll have some catching up to do. Gone are the days when businesses could justify manual payroll operations. Now, especially with the rise of remote work, using payroll software will help save both time and money. Using software can also protect the interests of your small business. Running payroll manually raises the possibility of making human error. We have compiled below some common small business payroll mistakes, which can be costly and are highly avoidable.
- Misclassifying your workers. As a small business owner, you may employ some workers and contract work to others. Classifying these workers correctly for payroll is crucial. For instance, a contractor works without any entitlement for overtime. Separately, you must pay the employer’s share of payroll taxes for your employees. Use payroll software small business to avoid the IRS potentially issuing any penalties. Your company may need to repay taxes with interest as well. You should also invest in a filing platform that supports both W2 and 1099 forms.
- Paying the wrong tax rates. Payroll taxes will change often and frequently result in avoidable payroll mistakes. Keep track of local, state, and federal tax revisions. If you have employees in different jurisdictions, you should also review the tax liabilities. Using payroll software that will automatically update with any changes can save you a tremendous amount of time and stress.
- Missing payroll deadlines. Employees need to pay their own bills and businesses need to comply with state authorities. If your business runs the payroll late, everything is thrown into turmoil, including the company’s future. Using payroll software small business can help you monitor your company’s cash flow. When you do that, you will know that you have enough money to promptly pay your employees. Additionally, a payroll software lets you automate payroll to avoid these issues.
- Not maintaining payroll records. Many businesses will lose track of their payroll records. That is why your company should invest in payroll software. Using the software to stay organized will help your business avoid audits or significant fines. The software can keep track of employees’ information like the amounts and dates of their wages.
- Underpaying your employees. You may find it surprising how often employers underpay their workers. The United States Department of Labor collected $322 million in wages owed in 2019 to workers. As an employer, make sure that you promptly fix any employee payment errors. If you fail to do so, you may face eventual claims and reputational damage for your business.
Why Use Payroll Software Small Business
Small businesses can avoid these and many other costly errors by using our payroll software. Our users can add the payroll software module to their W-2 and 1099 Forms Filer. The add-on feature lets business owners enter payroll, as well as non-employee compensation, by check throughout the entire year. The software also automatically calculates your company’s local, state, and federal payroll taxes. Once your processing is complete, you can use the E-Filer to electronically file your year-end W-2 and 1099 forms to the IRS or SSA.