100% payroll accuracy and it is a given. 99.9% payroll accuracy and you could have your hands full. It is that 1 in a 1,000 employee situation that makes payroll so vulnerable.
Managing Payroll has its darkest hours with blunders that prove to be ghastly. With regulations creeping around the payroll closet in addition to employee data churn, the organization’s business can be quite unnerving to look at.
- Brewing up wage overpayments in the cash cauldron
Overtime Wages is where organizations face circumstances that pose legal possibilities of getting an overpayment back off the employee. The Fair Labour Standards Act (FLSA), states that any organization is required to pay employees 1.5 times the regular pay rate or for time crossing 40 work hours. However, one must know that overtime wage laws vary across different regions. Miscalculating overtime wages where small amounts of an overpayment, when taken right out of the employee’s future payments, does not pretty much leave a great impression and vice versa. Scenarios involving overlapped entries in the time clock can be the reason for misclassification of the time payable. Sorting the overpayments can be a small headache when handled by a small workforce, but when doubled it can blow into a massive payroll migraine. And yet, overtime is just a small example in the payroll world. Absence, reimbursements, incentives, and allowances further compound the equation!
- Raking the chaos in compliance
Knock! Knock! Who’s there? It’s the Law!
Paying the wrong tax rates is the result of inadequate knowledge of local regulations. While this poses a challenge for global and in-country payroll experts, managing multiple statutory compliances can be an understatement for organizations. Regulations across countries pose challenges derived from change in amendments, repercussions in the organization’s payroll and compensation rules and these can be quite daunting. Without proper HR alignment in these countries, it will be quite a task to track and implement supposed changes in the laws. Organizations must remember that non-compliance with the country-specific laws will cost them a fortune with disruption in its reputation.
- Tricking the payroll timesheet
While human errors are common, the payroll document mess is a very cautioning error. Using paper over digital media is quite a challenge when it comes to having updated backups. Irrespective of whether the system is digital or old-school manual, one must know that timesheets can sometimes be altered and controls are very oft-overlooked or compromised. The organization can be issuing a wrong paycheck, and it never shows unless a petrified employee knocks on the door.
Additionally, mixing up independent contractors with full-time employees in the payroll timesheet can be a costly mistake because contractors do not need to be paid minimum or overtime wages. Employment taxes are not withheld from the wages of these contractors.
Ultimately, when tricking the payroll timesheet, organizations should realize that they will be forced to pay the employer’s share of taxes plus the interest to the employee.
- Dealing the deadline dungeon
Being Superstitious and not walking past the black cat may save one from bad luck. But what if it is payroll day?
Organizations with in-house payroll systems may cause the payroll admin to run across the black cat and reach office. Keeping that thought in mind, the payroll admin can be responsible for the late or incorrect deposits, misclassifying employees and can be careless about pre-tax, post-tax earnings and deductions. Payroll tax remittance is a key responsibility for a payroll admin that runs on a deadline. Not giving a heads up to the deadline can result in the payment of penalties. Organizations must be aware that not paying payroll taxes in given deadlines may cause national tax agencies such as the Internal Revenue Service (IRS) to bill a penalty. As per the IRS, if organizations are 1-5 days late when paying taxes, the penalty is 2%, 6-15 days late and penalty is 5%, and beyond 16 days the penalty is 10%.
- Stalling employee experience using a spell
Payroll is the trick or treat for the employees knocking at the organization’s door. Employers are responsible for making the payroll remuneration process a seamless one. Blunders such as mistakes in payslip or late payment is a big reason that effects the mental health of the employee as there are possibilities of financial problems such as the wrath of a bank charge. A research from CIPD states that 80% employees who have had a bad payroll experience cannot concentrate, 62% employees take longer time duration to complete a task and 50% are less patient with customers. If employees lose trust in the organization, they may not respond well. Blunders in payroll might also cause employees to leave the organization. Companies must replace employees who leave, incurring costs from having to recruit, interview, and train causing increase in projected costs thus affecting the budget.
Avoiding payroll blunders is critical for organizations to eliminate any form of payroll bottlenecks. This is possible by automating the payroll process. Having a cloud based payroll service helps organizations to stay up to date with the compliance regulations, taxes and keep a track of the timesheets. More importantly, if the transactional part of payroll is automated, organizations can have positive results in terms of revenue as well as employee experience.
Would you like to be reassured of having access to payroll solution that can save you from the wrath of payroll blunders? Write a mail to email@example.com.