Handling payroll in-house is a responsibility that should be handled with the utmost care. Among all of your bookkeeping tasks, payroll has the potential to produce some of the most negative repercussions for your business. The main reasons for this increased risk are: 1) you are submitting payments to your employees whom are a part of your company, and 2) you are responsible for the submission of all corresponding tax filings and payments to various tax agencies such as the IRS, and this will be on a continuous basis throughout the year.
Since there can be damaging consequences from payroll errors, AccuraBooks offers these payroll tips:
- Designate one person in your company to enter the scheduled payroll and prepare for processing. Designate another person to review and approve the payroll prior to final processing. Having an extra set of eyes will help catch mistakes. Also, be sure that only one or two people in your company have access to your payroll module. Limiting access will also reduce potential errors.
- Require complete W-4, I-9, and Direct Deposit information from your employees using the most updated tax forms. Consider having your employees update their W-4 forms each year. Some of the more common mistakes in forms are:
- W-4 forms are incomplete or the “Exempt” field is marked.
- Not collecting valid identification for the I-9 form.
- Not having company-approved Direct Deposit forms for the employees to fill out.
- Not obtaining copies of voided checks from employees for direct deposit purposes.
- Decide if employee health-care deductions are going to be pre-tax or post-tax. Pre-tax insurance plans must meet certain legal criteria to qualify as such. Obtain relevant payroll training prior to setting up these deductions in your payroll module.
- Try to keep employee advances outside of the payroll system if possible. Quite often, payroll advances and their corresponding repayments by the employee are handled incorrectly within the company payroll system; especially if advances are an ongoing issue/trend with an employee.
- Create an employee handbook that employees must sign. The handbook should cover important issues such as:
- Benefits such as 401k plans
- Handling terminations/resignations
- Job Duties
- Overtime, Bonuses, Commissions
- Other perks such as reimbursements for telephone, mileage, etc.
Note: AccuraBooks is a bookkeeping firm only, so please consult with your C.P.A. for verification and clarification about the contents of this article.