Payroll management can be like the elephant in the room: people rarely address it. Yet, it is a topic of gravity, as a well-handled payroll is key for employee happiness and productivity—any company wants to make sure no mistakes occur during the process. For this, it is vital to keep in mind the most common payroll errors and make due preparations to avoid such.
Beyond undermining staff happiness, payroll mistakes might come with legal repercussions or non-compliance fees, not to mention the hassle that late admission or correction can cause. One tiny mistake can launch a domino effect difficult to bring to a halt.
Also, we should not forget that in our rapid life, our most valuable asset is time. Correcting mistakes takes time, which means a company will waste its pure most important resource.
Most Common Mistakes
Miscalculating pay is probably the most common and most uncomfortable mistake that can occur through the payroll process. It leads to at least one awkward conversation and complicates administration further.
Misclassifying an employee can boil down to the erroneous calculation of benefits and wages and creates an administration whirlpool that might need to be sorted with the Inland Revenue Department (IRD).
Missing a deadline for submitting the necessary forms to the IRD is troublesome for many reasons. Beyond late submission fees due to not meeting your compliance duties, a significant amount of extra administration errands will emerge, burning away your valuable time.
Keeping haphazard records will not only cause trouble if you receive an external audit, but it can also hinder your job when you need to look back to previous years, in search of valuable data. As time passes, big data will become an increasing issue; untidily kept records add to the challenges.
Stay up-to-date with the most relevant information related to payroll. A significant amount of payroll errors occur when administrators are not in full understanding of the legal framework or lack the correct information needed for their work.
Automating your processes or deploying well-working software can help your payroll staff significantly in their work. Payroll can be a dull administrative task to do, but with the appropriate tools, the process can be streamlined easily.
Keep an annual calendar as well as a checklist so your payroll staff sees what needs to be done and when. Offering a structure that employees can follow will bring certainty and security to their payroll tasks, and it will help them see through the administrative havoc.
What to do after an error?
As Polish-British author Joseph Conrad said, only those who do nothing make no mistakes, and he hit the nail on the head: it is impossible to live or work without errors.
Should you make a mistake, the most important thing to do is to stay calm to find the best solution possible. To make the sound judgements, you have to make sure that your mind is clear. If the Inland Revenue Department has to be notified about the mistake, you need to inform them as soon as possible.
You also need to make sure to speak to your staff affected by the error. Give them context, tell them you will remedy the situation with urgency and thank them for their patience.
Payroll is a laborious process and demands undivided focus from your administrators. Make sure that your payroll administration staff is up-to-date, well trained, has all the information needed and has a safe and quiet place to work. Given these factors, you can diminish the possibility of mistakes ruining your end-month operations.