Payroll mistakes can cost you much more than back pay and unhappy employees. Some errors can even result in legal disputes or large fines from Revenue Canada. If you’re not sure if your company is susceptible to payroll mistakes, check out these 5 common problems with your payroll services and how to fix them for optimal business operations.
Monitoring Overtime Hours
Overtime can be difficult to calculate. You need to calculate exactly how much time an employee worked beyond their standard hours, as well as the correct rate of payment (time or time and a half). To prevent any problems and errors from arising, ensure you have a proper system in place for tracking employee’s hours. A punch in and out system or time monitoring software can help to make it easier to track any hours worked overtime and what you are required to pay.
Having a clock in and out system or hand-written time records can result in a business routinely overpaying employees due to inaccurate records. The honour system only works to your advantage if your employees are one-hundred percent honest with you. To avoid uncomfortable conversations, deducting pay, or legal complications, we recommend installing software that can collect attendance data and reduce any errors.
If your accounting team is responsible for producing payroll services across provinces or countries, it can become confusing regarding provincial and federal laws. With different laws and requirements in place, it can lead to simple errors that could lead to improper deductions or tax filings. One solution is to hire someone who is experienced in cross-border payroll filing or to hire a payroll manager for each area. Implementing software that is designed for such payroll services can also save you from any headaches down the road.
Employees vs. Temps vs. Contractors
Temporary employees and contractors are not treated equally as employees on the payroll system. It can be easy to misclassify employees, which can result in issues with payments, deductions, and taxes. To avoid any problems, ensure your accounting staff understands the difference between each type of work classification and have the employee’s classification properly entered into the system.
Cutting Cheques On Time
For employees who submit expenses, it can often be difficult to sift through all the details to cut the cheques on time. This can result in very unhappy employees and if you’re not careful, can also lead to legal issues. Employing an experienced payroll professional who has the software necessary to track and review expense reports can save you a lot of hassle.
One of the best ways to avoid problems with your payroll services is to hire a professional CPA who has the experience and software necessary to keep all your operations in order. At Priti Lad Professional Corporation, we offer expert payroll services designed for small to medium businesses, as well as accounting systems and solutions to help you succeed in a competitive marketplace. Call us today to get started!