Payroll tasks play an important role across all industries, and payroll accuracy is the minimum that employees expect from you. However, a slight overlook on your side and a lack of an efficient payroll process can result in errors, and this can become an unsettling aspect for the employees.
Payroll is a complex task and requires keen attention. As per the Deloitte Global payroll survey, 2020, 9% of firms with 1k or fewer employees do not have a standardized payroll process. All this leads to inaccuracy in the payroll process which further causes hassles in the already complex payroll realm.
Having said that, let us delve deeper and see some of the common payroll challenges closely, and ways you can avoid the same!
Common Payroll Mistakes and Ways to Avoid Them!
Here are some of the common payroll mistakes that occur usually and the ways you can overcome them:
- Inaccuracy in Pay Calculation
One of the payroll errors that happen is the miscalculation of your employee’s pay. It can range from overpaying to underpaying them or missing the first paycheck of the new hires which can cause severe hassles.
How to Avoid?
The first thing to do here is to be upfront about the errors and keep an honest communication. Tell them about the pay discrepancy and provide them with the steps toward a solution. This way, you can effectively handle the payroll mistakes underpayment, or overpayment of your employees.
- Errors in Tax Calculation
You can make use of the cloud-based payroll software since it is adept in automatically updating the current tax slabs and even automatically calculating the various tax liabilities, helping you avoid payroll errors.
If you or your team member is not adept or are involved in other important tasks, you can hire a firm, such as BookSol, which can do so on your behalf without hassle.
How to Avoid?
You can make use of the cloud-based payroll software since it is adept in automatically updating the current tax slabs and even automatically calculating the various tax liabilities, helping you avoid payroll errors.
If you or your team member is not adept or occupying other important tasks, you can hire a firm, such as BookSol, which can do so on your behalf without hassle.
- Incorrect Worker’s Categorization
Another common payroll mistake is inaccurate worker categorization. Today, apart from full-time employees, freelancers, and part-timers are also hired whose tax deductions, PAYG, and other benefits vary from those of the in-house employees. All these can lead to penalties and non-compliance issues for your firm.
How to Avoid?
Make sure that the information collected from the employees during the hiring time is reflected in the system. Try to have a centralized database of workers and integrate it with the payroll software to remove the misclassification error. You can also set a process for this type of task to avoid folly.
- Unorganized or Incomplete Records
Another aspect that hampers payroll accuracy is incomplete or unorganized records. If you have physical storage, it might become difficult to search and can adversely impact the payroll process of your employees.
How to Avoid?
The best way to avoid unorganized or incomplete records is by using a cloud-based storage system or hiring a firm that can support you in this so that you can effectively store your payroll records. This can help you reduce the chances of physical damage to the records or the problems of missed information.
- Missed Tax Deadlines
The PAYG which is withheld during salary processing is required to be deposited with the tax department every month per the deadline. However, delays will not only affect your employees, but they can also lead to penalties and other interest payments to your organization.
How to Avoid?
The best way to avoid missing deadlines is by using an automated system that sets calendar notifications for the upcoming tax deadline. This will help you avoid payroll mistakes in your firm. You can even choose a reliable firm that can carry out these tasks on your behalf and is abreast of all the aspects of Australian tax laws, thus minimizing your hassle.
- Delays in Offering Salary Slips to Employees
Every salaried employee needs to be offered salary slips within a fixed deadline so that they can file their individual tax returns. However, many times, downloading these salary slips and making them available to the employees gets delayed, which can lead to penalties.
How to Avoid?
Encourage self-service portals so that your employees can digitally download salary slips. In addition to this, you can also use automated emailers to send the relevant salary slips to employees but make sure that you schedule these emails before the deadline.
- Lack of Data Security Measures
Another common mistake that occurs in payroll processing is that firms fail to maintain utmost care in maintaining data security measures which ultimately leads to data breaches.
How to Avoid?
You should keep physical and IT security in place. Establish protocols so that the payroll handling team understands the importance of protecting sensitive employee information and takes care to safeguard them. You can even choose a firm that is proficient in handling the crucial payroll data at hand.
Final Thoughts
Payroll is indeed a crucial aspect of running a smooth business. Although errors do happen, with some payroll tips and tricks, you can minimize these common errors and build your employee’s trust in the organization. And once trust is built, their productivity will increase, adding to your growth.