2 Small Business Payroll Mistakes You Could Be Making
As a small business owner you probably feel like a jack of all trades. Not only do you have to come up with the processes and practices that keep your business functional, but you also have to implement and execute them. To add burden to your already heavy load, you also have to pay your employees. Particularly when it comes to payroll, trying to take on more than you are actually prepared to can lead to a number of mistakes. Here are just some of the common payroll mistakes you're likely guilty of.
For tax purposes, each person on your payroll must be classified as either an employee or independent contractor. It is your responsibility to ensure you have each person classified correctly. The reason this is so important is due to taxing requirements.
With an employee, you share a portion of their tax obligations; however, independent contractors are responsible for 100% of their tax obligation. If you designate an individual incorrectly, both you and that person could face tax penalties at the end of the year. Some small business owners overlook this step and it turns out to be a costly mistake.
If your business participates in an annual anniversary bonus program, one thing is for sure – your employees are waiting for and expecting this extra money. A common mistake some small business owners make is forgetting to track the anniversary date on which each individual should receive their bonus.
While this is an easy to fix mistake, it can make you appear unprofessional and organized; not to mention, it can be an inconvenience to the employee if they were counting on this extra money at a particular time. Staying on top of bonuses requires detailed tracking of an employee's anniversary date and performance.
Avoid these small, but costly mistakes by outsourcing your payroll needs. A payroll services company won't just ensure accurate and timely payments for your staff, but they will also keep tax information, bonus details and any other important classification data on hand. Especially when it comes to employee compensation information, ensuring accuracy is key to compliance with the tax administration. Rest assured that you're avoiding any mistakes and your team is being well taken care of with a payroll services company.
Don't add on to your already long list of things to do and consider a payroll services company like Blueback Accounting to meet your needs.