Tricky Parts of Payroll You Need to Get Right
It’s common for interviewers to ask prospective employees why they want to work for them or why they want that job. There are a lot of different reasons the interviewee might give, but the underlying reason for nearly all of them is that they need a job that will pay the bills. That makes payroll one of the more important tasks your business handles. Of course not all parts of payroll are simple. There are some trickier parts that are critical for you to get right.
Correctly Classifying Employees
Do you know how to classify your employees? There are two different ways to classify employees: salaried and hourly. There is also the independent contractor classification, but technically independent contractors and employees are not the same thing (which is another important classification distinction). Misclassifying employees could cause problems for taxes and making sure that you’re paying them properly.
Tax Withholding
Tax withholding may sound simple enough. After all, you should be withholding a certain amount based on what you’ve agreed to pay your employees, assuming they are salaried or hourly, and not independent contractors. Once you start working in benefits, it can get a bit more complicated. Some benefits are pre-tax benefits, while others are based on income after taxes have been taken out. Make sure you’re withholding the proper amounts from each employee’s paycheck, since inaccuracies with tax withholding could land you in some hot water with the IRS.
Overtime
Overtime should be calculated on a weekly basis. Any employees who are not considered exempt must be paid 1.5 times their hourly wage for any time worked over 40 hours. Again, that should be something that is easy enough to calculate, but some businesses have a tough time with that. This is also where correctly classifying employees comes into play. If you misclassify an employee as being exempt when they aren’t, your payroll isn’t going to be accurate, your employee will likely be quite put out about the money they’re not getting paid, and you could end up in legal trouble due to this payroll inaccuracy.
Accuracy is a big deal when it comes to payroll. Mess it up and not only will you almost certainly be facing disgruntled employees, but you could also potentially end up dealing with fines (especially if the IRS gets involved). It can be a lot of pressure, but don’t worry. Quality Payroll is here to help you with all of your payroll needs.
Could your business use some help with payroll? Click here to contact Quality Payroll and see how we can help your business today!
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