Running a business is like sailing into the sea—it’s not all sunny weather. Soon enough you’ll be facing large waves and thunderstorms or simply put, tons of problems. Managing payroll is vital in every business because it is part of dealing with the welfare of every employee. Inaccurate or late turnover of salaries can tarnish the company’s reputation and damage the relations between the employer and the workers.
Here are some of the most common payroll problems encountered by small businesses, along with their solutions.
Manual Processing of Payroll
The use of traditional tools in manual processing may seem cheap and adequate for very small businesses at first. But later on, you’ll soon discover that it is very much time-consuming and error-prone so the risks will be high for your business. To be fair, there’s no 100% way of avoiding errors, but it will be much easier if you manage to keep up and comply with regulations and protect your company’s private information. This is why it is necessary for growing businesses to automate their process with the help of technology or a payroll service provider.
Compliance with new and changing employment laws and regulations.
We know you wish laws and regulations didn’t change. But the sad reality is they do—and there are federal, state, and local regulations that all add up to your worries. Once you fail to get updated with regulatory changes and incorrectly calculate employee pay or tax liabilities, a penalty awaits. Good thing there are payroll solution providers that can automatically stay up to date with changing regulations, though you still need to regularly train your staff.
Avoiding under or over payments
No one likes to be underpaid—or to be asked to return money if they’re unintentionally paid excess money. Simple mistakes that can lead to these may create bigger problems later on when left unattended. But you can prevent this by reducing calculation errors through automated processing which minimizes manual data entry. Swift action is a must once an erroneous payment is discovered, the sooner you can inform your employee the faster you can correct it.
Ensuring Accuracy of Record is kept
Compliance requires accurate records and detailed reports to avoid any irregularities. There are laws regarding labor standards that mandate the keeping of employee earning records in a period of up to three years. Even if you have an on-staff payroll specialist, you still can’t be 100% sure. A payroll solution on the other hand offers more reliability and accuracy when it comes to compliant storage.
Securing Privacy and confidentiality
A data breach can be instant and it poses a huge risk to payroll systems which are being run by highly sensitive data like social security and bank numbers, home addresses, and pay rates. It is important to keep in mind all the time that every company needs to impose transparent and direct-to-the-point privacy policies as well as secure payroll records. It is also advisable to implement strict internal controls over who can access sensitive pay-related information.
