Common Payroll Mistakes to Avoid

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The IRS has several rules and regulations when it comes to governing payroll. Your mission, whether you are a business owner or payroll manager, is to avoid running into problems with the IRS. Avoiding an audit is a goal for anyone, and can be done partially by not making mistakes with payroll.

Payroll seems so simple. Yet, one mistake can bring problems both from the government and your employees. According to the IRS’s “Employment Tax Research Project” payroll mistakes tend to fall into four categories. Whether because of wrong time clock data or deliberate fraud, payroll mistakes tend to occur in:

·       Fringe benefits

·       Worker misclassification

·       Payroll taxes

·       Executive compensation

Broken further down, common payroll mistakes made by businesses tend to boil down to:

1. Classification of Employees as Independent Contractors

2. Failure to Subject Vendor Payments to Backup Withholding

3. Failure to Issue Form 1099s

4. Not Including the Fair Market Value of Gift Cards, Prizes and Awards in Employees' Income

5. Failing to Timely Deposit Withheld Taxes

6. Failure to Timely Deposit Withholding Taxes on Vested Restricted Stock and Exercise of Stock Options

7. Incorrectly Excluding Expense Reimbursements from Reportable Wages

8. Failure to Include Nonqualified Deferred Compensation in Executives' Incomes

9. Not Including the Appropriate Value of Taxable Fringe Benefits in Employees' Income

10. Excluding Travel and Commuting Expense Reimbursements from Employees' Income.

Avoiding these mistakes can be as easy as investing in a new time clock or even hiring outside payroll management. Either way, it is always in your best interest (and your employees’ interest) to have an efficient, effective payroll system in place.

Working With Others

If you share workspace with others, there are quite a few written, and unwritten, rules you should know. Of course, not all common work areas are the same, but in general, it is best that you try to be self-sufficient.

A time clock might be at the entrance and perhaps you need to punch in or just use it for specific jobs. Know the rules about the time clock and who should use it.

It also helps to know how much talking and chatting is tolerated. Some workspaces are silent, but most allow at least a moderate hum. Try to learn the upper limits of noise and adhere to the common rule.

Keep in mind that you should not bother others with questions that pertain to your own work. If you are self-sufficient, moderately quiet, and know about time clock rules, a common work area can be your friend.

The secret to getting along in common work areas has to do with friendliness. Try to stay in the social network and do not abuse the allotted time for work in the area. Often, shared workspace is used for events in the evenings, so you need to know when to make a timely exit. A visible time clock can help with this detail. Networking with the other employees and respecting the space usage policy are two habits that will make you a good neighbor to your comrades.

Finally, remember that the kitchen area is for your use, but the food is not. Unless a food item is specifically marked as a group item, do not touch it. Bring your own food and eat it in the kitchen. If others do the same, everybody will be happy and there will be no bad feelings about ‘stolen’ meals.  

The Uses of a Punch Time Clock

The time clock has become a very important tool in the business. Time clocks can not only help monitor work places but can also establish a clear vision of the working time in the company. A punch clock has many benefits for all parts of an enterprise, as well as for management employees.

Punch clocks help record time in and out by employees and workers. Not only are these time cards used for payroll, but they can also be used to help monitor how much time is spent on specific projects as well as on working schedules of specific departments. In addition, punch time clocks can help provide a clearer image of what the bottom line of the company is, and is not, completing.

More modern time clocks offer other features. Building security, including management of time management, secure entry and management of movements in different spaces are just a couple of things that a time clock can do for a small business. User management with access controls for visitors whether they are customers or suppliers and parking management. A time clock can intervene to control access or entry point in a building to identify, authenticate, authorize or prohibit the attendance areas for which it is programmed.

The advantage of the time clock for various stakeholders of the company, department heads, and administrators lies in the ability of terminals to record and make available comprehensive information. Information from the time clock is pulled off as easy as it is put on. Employees will time stamp their hours simply by “clocking in”. Payroll will then break down the hours and then count log the time they clocked in and clocked out, totaling the hours up and then cutting a check.

In the end, while a punch time clock is not for everyone, there are numerous other options on the market that offer a variety of features. Do your homework and decide whether a punch clock is for your or if a different model would better suit your needs.