Ensuring employees are paid accurately and on time is a priority for most small business owners. They also need to remain in compliance with state and federal tax regulations. Payroll mistakes can be costly and have stiff consequences, so here are common errors to watch for.

Top 4 Payroll Processing Errors

1. Incorrect Employee Classification

If an employee’s status is improperly classified, the wrong payroll tax information can be sent to the IRS and state tax agencies. Businesses must correctly designate individuals as temporary, full-, and part-time workers or independent contractors. Failure to do so may result in interest charges until the corrections are made.

2. Wrong Tax Calculations

Not taking out the required amount of taxes from employee paychecks is another common payroll mistake. Entering the wrong figures or making mathematical errors can lead to incorrect taxes on deductions and incomes. It’s important to ensure employees have submitted the proper withholdings and that those amounts are applied to each paycheck.

3. Missed Deadlines

There are established deadlines to submit payroll taxes to the IRS and state tax agencies. Failure to make timely submissions by the due dates may result in fines and interest charges until the taxes are received.

4. Garnished Wages Mismanagement

Companies must comply if an employee has a court order to have child support or other levies garnished from their paychecks. The payroll processor is responsible for ensuring the required amounts are sent to the appropriate individual or entity. If the garnishments aren’t made or are mismanaged, the employer may receive monetary fines until the court order is followed.

If you’re a small business owner and would like professional assistance avoiding these fines and charges, contact the experienced team at PayrollHR Hawaii in Kilauea. Serving Hawaii, this firm provides extensive payroll management and bookkeeping and will ensure your business practices labor law compliance. They also use advanced cloud-based technology to automate your back-office support system. Call (808) 828-2070 to speak with a specialist about your company’s payroll needs, or visit the website to view their bookkeeping reviews.