Common Payroll Problems And How To Avoid Them
When you are managing payroll for a large company, chances are good that you come across your fair share of headaches. Payroll is a complicated system and it can be difficult to make sure that everything is running smoothly. Here are some common payroll problems that you might run across and some easy fixes.
1. Make Sure All of the Social Security Numbers Are Correct
It's easy for an employee to accidentally misstate his or her Social Security Number when applying for a job or filling out paperwork when he or she has the job in question. However, this simple mistake can create huge headaches for a payroll department because everything that the employee earns will not be credited to that employee's Social Security Number if you have the wrong number. If you want to avoid all of the paperwork that is required to fix this type of problem, you are going to need to make sure that you have the correct Social Security Number for each employee. You can do this by running the number that the employee provided to you through the Social Security Number Verification Service. Taking the time to verify each SSN will save you tons of time later.
2. Wrong Classification of Contractors
Another very common issue is if your company classifies employees as contractors when they are really employees or vice versa. This is a problem because it can result in your company not withholding the necessary taxes because contractors pay their own Social Security taxes. If you make this mistake, you will have to go through a great deal of hoops to fix it and possibly pay some fines. To solve this problem, simply make sure that you are classifying employees correctly. You can talk to the IRS in order to have them classify an employee that you are not sure about by filling out the SS-8.
3. Overtime is Not Dealt With Correctly
Even if you don't have any employees who are allowed to work more than 40 hours per week, you are going to want to set up a system for overtime. For example, federal law requires that you pay your employees extra for every hour that they work over 40 hours per week, but does not require this extra money to be paid on Saturdays and Sundays. You need to check your state's rules in order to make sure that Saturdays and Sundays are included in order to make sure that you are doing overtime pay correctly. By setting up a system before the event occurs, you can avoid having any problems with the government.
For more information, talk to a company that specializes in payroll services, such as A & C Accounting & Tax.