So you’ve developed an amazing new product and are finally read to really launch your company. You’ve got a location, employees, capital and a business plan, so you’re ready to go, right? Not so fast. You still have to figure out how you’re going to pay your employees and yourself. You can’t just write your employees checks and be done with it. You have to handle various federal, state and local taxes, keep records and be prepared for problems. If you offer benefits like health care and a 401(k), it becomes an even more complex task and makes it all the more important. There are many ways you can both prevent and deal with payroll errors when the time comes.
If you don’t want to deal with it or don’t have the resources in-house, there are other options, too. Many payroll and human resources companies like Paycor offer services that may reduce these headaches and streamline the process. Further, several will help you overcome errors and answer your questions, ensuring that you avoid more mistakes in the future.
Don’t Dawdle When It Comes to Payment Errors
If you do make a mistake on someone’s paycheck, don’t put off dealing with it. Overpayments happen, but if they’re not dealt with appropriately and quickly both you and your employee can end up angry and hurt. If you wait for your employee to return the overpayment and they don’t do it promptly that can undermine your confidence in your employees. On the other hand, if you come to them well after the incident and ask for the money back it can upset them. Underpayments should be handled swiftly, too, in order to keep your employees happy and eliminate potential lawsuits.
Keep Up With Deadlines
When it comes to processing payments—both to your employees and the government–deadlines are key. If you’re late with a promised payment to your employees you could be the recipient of a civil suit while being late with tax payments can get you in trouble with your state or the IRS, resulting in hefty fines.
Use Proper Classification
If you have a mix of salaried, hourly and contracting employees, you need to make sure you’re classifying them properly. You have to report each employee differently to state and federal agencies for tax purposes.
Check your Data Entry
One small mistake on a form can cause huge problems for you and your employees. Incorrect reporting to government agencies can result in hefty fines while improperly entered wage information or hours worked can undermine your employees’ trust and ruin company morale.
Develop Payment Rules
You need to clearly define all of your payment standards and policies in writing and present it to your employees – ideally before you hire them. State the procedure and requirements for promotions, raises, bonuses and pay periods. Make sure everyone knows what’s going on and agrees to it in writing to minimize headaches down the road.
Keep Everything—and Keep It Safe
You never know when someone is going to dispute something on payroll. It may be months or years after the fact and if you don’t have your records from that time it can be difficult to defend yourself.
If you have a small company or just don’t feel confident in your ability to manage all of the intricacies involved in payroll, consider outsourcing your payroll services to a third party. There are many full-service HR firms that will handle all of the details and let you focus on building your business.