Mistakes To Avoid When Outsourcing Your Payroll
Without a doubt, small businesses do spend a considerable amount of resources in order to ensure
that their core operations would run smoothly. Though, aside from that, special attention must also
be given to peripheral business functions, such as employment law, workplace safety, employee
benefit administration, and so on. Even a minuscule mistake in the human resource department
could lead to the downfall of the company. To ensure that, extra care should be given and simple
attention to the details could often help in avoiding discrepancies when it comes to tax deposits and
withdrawals. Below are some of the most common mistakes that should be avoided when
outsourcing your payroll
#1: Setup Errors
Believe it or not, even when you carefully calculate your employees’ wages or you always say to it
that you get payroll right in time of each period, if the payroll operation isn’t set up carefully, there’s a
possibility that you wouldn’t get the results you’re aiming for. For one, before anything else, it’s
important to register your business and ensure that you’ve set your state, federal, and local tax
withholding correctly. Also, it’s essential that you’ll make it a point to classify your employees
accordingly. Not following this could have a negative result in your business. You’ll be in big trouble
with the FTA
, especially if you withhold the wrong amount from your employees for local and state
income taxes, social security, and Medicare. Furthermore, when it comes to outsourcing, obviously,
you don’t want to incorrectly classify an employee as an independent contractor or vice versa,
because this could really give your business a bad name.
#2: Forgetting to Record the Payments
Try to imagine this: there comes a time that one of your employees requested for a payday advance
and you’re in a hurry. So, in order to answer his request, you quickly wrote a check and handed it to
him. Likewise, during the holiday season, you’ve made a plan of giving away gift checks instead of
their year-end bonuses. The question is, would you record these expenses in the payroll processing
Most of the time, a small business finds it hard to balance the books because they often neglect to
record a payment or two, thinking it’s insignificant. Keep in mind, no matter how small the amount is,
it’s important to record them because it could affect the system.
#3: Failing to Make Tax Deposits on Time or Correctly
The moment you’ve set up withholding correctly, as well as being able to take the right amount from
both your business and your employees, it’s important to be familiar with what you’re going to do
with the money you’ve collected.
It’s crucial to know when and how often you should deposit your tax payments. Aside from that,
know what forms you’re going to use and if it’s possible to deposit the funds electronically, or you
could only do it the old-fashioned way. There are a lot of rules in regard to this, and most of the time,
they could be a little confusing. One thing is for sure though, failing to do this properly would affect
#4: Doing a Payroll Late
Most of the time, we can’t avoid doing an abrupt payroll calculation, especially when we’re quite
busy. By doing so, there’s a huge risk that you’re paying someone too much or too little and this
could throw off your books and damage your employee’s morale, even though you didn’t mean it.
Likewise, it’s never ideal to do payroll late, or expect your employees complaining about how
unprofessional you are. Once this happens, you’re going to lose your employees’ trust and it’s
almost impossible to get that back. Also, failing to do the payroll on time could mean late tax
deposits, resulting in FTA penalties.
#5: Neglecting to Update State Employment Rates
Your state employment rates change over time. If you got a new rate from your state agency and
you didn’t even change your payroll system, like how it’s supposed to be, this would result to a filing
that’s misconstrued. The result? You’ll need to shoulder a penalty.
#6: Failing to Protect Yourself from Payroll Mistakes
Fortunately, there’s an easy way to refrain from committing those payroll mistakes. By outsourcing
your payroll services to a professional employer organization, you could ensure that your payroll
would always be on its positive condition.
Outsourcing your payroll would help you save a considerable amount of time, that you’d usually
spend working on with your payroll. This includes the hours you spent working and worrying if you
even did your payroll correctly. Additionally, outsourcing your payroll to a professional is considered
to be cheaper as compared to hiring an HR person. Best of all, you don’t even need to worry about
losing an employee to another company or any kind of troubles related to mismanagement.
Our payroll processing services aim at efficient employee payroll management so as to reduce administrative burden and curtail extraneous financial costs. This helps you streamline your business growth and improve your company’s performance by concentrating on core risk areas in business with increased flexibility to respond to requirements.
We at Alya Auditors,have our team of experts to help entrepreneurs set up their payroll function in Dubai and the rest of the UAE. Should you decide to open a business here, do contact us
, we’d be glad to help.