Payroll is one of the most important and yet among the most underappreciated functions. Both your employees and regulatory authorities expect the payroll function to be accurate. It’s one of the basic necessities to keep your employees happy, and the smooth functioning of it is a major indicator of your company’s overall financial and operational health.
It’s so critical that when a payroll mistake crops up, its impact can be seen in all departments of the company. It’s a function you just can’t be lenient about and yet can be time-consuming. Payroll outsourcing services in India not only help you free up time and resources so you can focus on core functions of your business, but they also ensure accuracy and efficiency – saving you long-term costs and risks.
If you’re doing your payrolls on your own, here are the common payroll mistakes to be aware of and how you can avoid them.
1. Misclassifying Employees
If you’re using both employees as well as independent contractors for your business, you have to be very careful of how to classify them in your payroll. The Fair Labour Standards Act offers benefits and protections to most employees under law. Some of these protections and benefits include minimum wage, overtime pay, etc. Independent contractors do not avail these benefits.
Sometimes companies slip up on some of their employees as independent contractors to save on income tax, employment tax, etc. This will have long-term consequences as the employee not only fails to avail the benefits they are entitled to, but the government also misses out on the taxes due to it. The IRS scrutinizes employment arrangements. Therefore, you should be careful about how you classify your employees.
2. Miscalculating Pay
You or your admins can have a lot to keep track of when it comes to calculating the pay for your employees – overtime, PTO, deductions, commissions, and so much more! Your state may have different policies regarding some employment related rules. So keep in mind that you should always comply with the law that is more generous towards your employees.
Time tracking is a crucial function in calculating pay. If you don’t have a reliable tool to track paid time off or employee working hours, your payroll mistakes may skyrocket. Offshore accounting services in India can help you track and calculate pay with accuracy and in your and your employees’ best interest.
3. Missing Deadlines
When it comes to payroll, timing is everything. Employees expect to get paid on time. When this expectation is not met, your employees are likely to lose trust in your company. Many states have payday requirements (weekly, bi-weekly, semi-monthly, monthly) and missing the deadline will cost your company internally and externally with taxes, late fees, penalties, etc.
Outsourcing your payroll services in India can ease things up for you for internally (paydays) as well as externally (taxes) – therefore ensuring a smooth payroll process.
4. Poor Record Keeping
The US Department of Labour requires employers to keep three years of pay records. Some states may require record dating further back. These records include hours worked, payment rates, etc.This data is crucial in case of future audits.
Payroll outsourcing services in India will undo any sloppy record-keeping and data entry mistake, saving a huge number of dollars in penalties and overpayments.
5. Neglecting To Send Out Tax Forms
Even if you are thorough and avoid these mistakes, there’s a last step where you need to be
accurate and timely. After a successful year of processing payments, you need to make sure you are sending out the right tax forms to the right people to avoid inconvenience – for instance, you need to send out W-2 forms for your employees and 1099s for independent contractors who earned $600 and more. Additionally, tax rates are subject to change and need to be updated in your payroll accordingly.
Accounts payable services in India can ensure your payroll process goes smoothly throughout the year.
At BMC SAAS, our payroll processing service procedure comprises record maintenance, payroll preparation and cost analysis, submission of statements to authorities, salary and pay slip. BMC SAAS will take care of all your payroll requirements so you can pay with confidence and right on time.
To learn more about how BMC SAAS can help your business, contact us about your business’ requirements.
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