5 Common Payroll Mistakes and How to Avoid Them

Payroll can be complicated! Accuracy and timeliness are critical to making sure your employees are paid correctly, there is little room for error. Unfortunately, mistakes happen and the results usually take time and expense to correct, or worse, fines, penalties and back wages. Of course, we cannot forget the issue of dealing with depressed employee morale as a result of payroll errors.

Today we’re looking at five of the most common payroll mistakes companies make, and some ways to prevent them from happening.

Getting employee details wrong
When employees are hired, or when employees make changes to their address or exemptions, be sure to double check their info, including the spelling of their name, address, their social security number, pay rates, tax exemptions and direct deposit numbers.

Better yet, have them double check their information. All your employees can and should have access to their payroll portal so they can be made responsible for checking their own information for accuracy.

Improper Deductions
Setting up deductions can be a complicated matter due to the many factors involved. Whatever deductions you are setting up for your employees, whether they are health insurance, retirement, garnishments, life insurance, supplemental insurance, or others, it’s important to consider the necessary parameters. Taxed or pretax, who the vendor is, is Infinium paying the vendor are should funds be left in the client’s account, is there a stop date to the deduction, and other important details.

It’s critical to provide your payroll rep with as much information as possible so the deductions can be structured properly, the vendors are paid, and employees can see the detailed information on their paycheck stub.

Incorrect Hours Paid
Whether you use timekeeping or not, it’s important to review hours worked for each employee for each week worked. If your employees are still turning in manually recorded hours, be sure you’re checking them to be sure they are accurate, and that the employees did not add hours not worked, shorten their hours accidentally, or missed recording their meal break.

With timekeeping, be sure to review timecards for each week worked and correct any missing punches. Be on the lookout for missed or short meal breaks. Our timekeeping systems are capable of restricting punches less than 30 minutes to prevent short meal breaks, but if you’re not using that feature, check to be sure breaks are no less than 30 minutes and no later than the beginning of the 5th hour worked. Be sure to lock timecards in the payroll system when your review is complete, so no further changes can be made.

Not Tracking and Paying Time off
If you’re still manually tracking paid time off, you should always have employees turn in vacation requests and properly report sick days. Hopefully tracking and reporting time off accruals through the payroll system, but it’s still important to double check each pay period.

One of the best ways to prevent missing paid time off is to use automated timekeeping and ensure employees have access to their payroll portal and can request time off. This can prevent any mistakes or missed paid time off.

Not Asking Your Rep Questions
At Infinium, we have a saying: Anything “outside the circle” of everyday payroll, be sure to get a second pair of eyes on the setup or entry before finalizing process. This means anything that doesn’t fall within the normal, everyday process for our clients, be sure to get help to ensure that it’s correct.

Businesses should also take the same approach. For anything that is beyond standard hourly payroll, like setting someone up as exempt, or setting up new deductions, or trying to make sense of overtime rules, it’s best to check in with your rep at Infinium so they can review. Most importantly, we all know that the laws in CA are very complicated…what makes sense to your average business owner or manager, does not necessarily make sense to our government. We can help to be sure you’re compliant.

Here are some other ways to prevent payroll errors:

Run Reports Prior to Payroll
Be sure to run a few key reports BEFORE closing payroll can help you catch and prevent mistakes as well. We suggest running the following reports to make sure all your check amounts are correct:

Payroll Register – This report allows you to see the detailed payroll information in a summary format.
Deductions Summary – This report provides a summary of all deductions for every employee, so you can double-check the amounts.
Payroll Summary – This report shows how much money your organization must have available in order to pay payroll, broken down by categories like wages, taxes, deductions, etc.
Leave Accrual – This will show you each employee’s detailed accrual and leave information so you can be sure everyone is tracking correctly.

Conclusion
Being aware of the most common payroll mistakes is a great first step to avoiding them in your own organization and maintaining a smooth payroll process. We’re here to partner with you at Infinium to ensure as much of a seamless payroll as possible.

If you feel like you’re taking too much time with payroll or that the process is not fool proof enough, please let your rep know. We can help you improve your process today and make sure payroll processing is easier and more accurate.