To process timely and accurate payroll, it must be set up correctly from the start. Proper business registration, accurate calculations for local, state, and federal tax withholding, and proper employee classification are required for accurate payroll. If these things aren't set up in your accounting systems correctly your wage and hour calculations for paychecks will be problematic. Withholding the incorrect amount from employees for income taxes, Medicare, and Social Security can get you in big trouble with the IRS. Classifying employees as independent contractors can cause headaches with the IRS and state as well. Be sure to use the IRS Common Law Rules when classifying workers.
Payroll delays can mean paying the wrong amount to employees, throwing off your general ledger balances, and losing the trust of your employees. Payroll delays can also lead to late or incorrect payroll tax deposits and costly IRS penalties. Establish and adhere to a regular pay period and dedicate payroll staff to timely payroll processing or outsource your payroll and avoid the problems that come with payroll delays.
Not Updating State Unemployment Rates
State unemployment rates (SUI) may change over time and you need to use the current rates. When rates change, you need to update them in your payroll system to ensure accurate withholding and payments to avoid state fines and backtracking with your accounting system to straighten it out.
If you’d like to explore the option of outsourcing your company’s payroll needs, please contact us at firstname.lastname@example.org or call 1-844 MY ACCTG. Simplicity Consulting is a professional accounting and administrative services firm run by a talented team of professionals. With a combined experience level of over 40 years, we provide high-quality, innovative services to small and medium sized businesses.