Accounting companies have to face a number of challenges daily to smoothly provide services to their clients, but out of all the accounting processes – payroll processing services are highly challenging. Payroll compliance is a headache for accounting service providers as they have to deal with multiple issues to complete this process such as –
Payroll services company has to constantly monitor changes in rules and regulations of payroll compliance at the federal, state and local levels.
Internal changes like – incoming and outgoing of employees, change in vendors, outsourced employees’ salary management and other firm-level changes can be a challenge for payroll staff.
All these problems make the work of payroll service providers harder and harder. But, smart payroll outsourcing services company like CapActix has nailed the payroll management system by avoiding a few common payroll compliance errors. Yep, in most cases, accounting firms just need to reanalyse their payroll management system and they will automatically see where they were going wrong.
Payroll Compliance Mistakes to Avoid
When you don’t want to lose a potential client due to your small payroll compliance mistakes, then you got to avoid following errors at any cost –
Arrange your Documents Systematically
A common payroll mistake that payroll staff may commit is mismanaging the important files. It is essential to have all the employee records and information arranged in a systematic manner to create an accurate payroll account. Moreover, if your staff hasn’t arranged employee record files provided by clients in an accurate way, then proper workflow can’t be maintained.
So, foremost ensure that important files and documents are located in a centralized location from where payroll staff can easily retrieve information. This way staff won’t miss out on any important record that might get mis looked due to unorganized storage of files and documents. Even if you are using digital records nowadays, you still need to place digital documents systematically so that information can be retrieved quickly.
Adhering Payroll Deductions
For payroll services company and its staff, processing payroll deduction is one of the hardest nuts to crack. The variation in the federal and state laws of payroll deductions can create confusion in the mind of payroll staff. This confusion and rapid change in the payroll deductions on the state and federal levels can produce errors in the compliance of payroll services.
Thus, it is the responsibility of payroll companies to monitor federal and state deductions rules carefully and keep their eyes upon to observe any change in the deduction rules. So, being an important task of payroll compliance process – it is the most mistake-prone area as well.
Inaccurate Employee Data
Payroll compliance will go down the hill – if the proper employee record hasn’t been made or updated regularly like age, citizenship status, salary account number, etc., If employee’s data isn’t updated periodically, then various problems can occur and can even more complicate payroll processing services.
For example – if an employee under Employment Pass has secured Permanent Resident status, but this change in immigration status is not duly notified and updated in the employee details, then the appropriate CPF deductions and contributions would not be made. This is going to cause heavy penalties to your client’s company and delay employee’s salaries. So, if you are a payroll outsourcing services company, then you should ask your clients to run a periodic audit to update employee details to avoid penalties.
Not Settling Up Payroll Software
Some small accounting firms don’t invest in the payroll management software and let their employees manage everything manually. Now, companies are doing this to save up money on purchasing payroll software, but in reality, they are losing business because humans are bound to make errors. The software can reduce the number of errors as separate profiles of the employee is recorded in it.
So, if you are thinking of saving business expenditure by not settling up proper payroll accounting software, then immediately scratch that idea because it is going to damage your business reputation in the end.
Understanding Overtime Rules
Well, when the employee spends extra working hours, then his regular working hours – it is an overtime situation. Both federal and state payroll laws have provisions to pay extra to employees who work overtime above the standard working hours. Here, every business organization follows different overtime rules according to the state law and standard industry rate and this leads to a mistake of compliance as payroll companies have to keep a record of various overtime rules.
The general overtime rule that’s followed by most of the business industries – an additional 50% of employee’s basic hourly rate. But, still, all this variation in the overtime laws can lead to messed up payroll processing.
Trouble of Payroll Tax Deposits
It is understandable by business organizations clearly that tax deposits need to made on the 15th day of the month when tax is deducted from the salary of the employee. But, if the business organization fails to pay tax on time, then the IRS will be ready with fines and penalties. In general cases, the IRS will penalize 0.5% of the taxable amount due every month. However, an additional 25% will be added to the amount if tax is deposited exceptionally late.
This becomes very troublesome for payroll staff to add extra penalties cost to the payroll account in the already created account. And, this can lead to multiple mistakes if an additional amount isn’t added properly.
Risk of Compromise
Personal data of employees is highly confidential. There’s a big chance that employee’s personal data can be compromised when in-house staff is creating payroll accounts. This breach of employee’s confidential data will have severe repercussions on the company. To avoid this problem – payroll outsourcing services will be a great solution as the outsourced company has no direct interest in the confidential information of an employee.
Safeguard your Payroll Management Process
Payroll services are highly delegated to payroll services companies nowadays because every business organization wants flawless payroll services without burdening their in-house staff. Thus, it is a golden service that can increase the profits of accounting firms, moreover, they can even outsource payroll services to increase their productivity. Thus, to gain more payroll work from your clients – it is vital to avoid common payroll compliance mistakes and provide flawless services.
To hire the best-outsourced payroll outsourcing services, you can contact CapActix on email – [email protected] or can call on +201-778-0509 and experience the top-class payroll processing services.