Why Should I Consider Adopting an ERP System?February 7, 2023
Here are 5 ways an ERP system can transform your business: It’s easy to get connected, and at gotomyerp, we’re here to help. Sign up online or give us a call today.
Employees put in dedication, effort, and extra hours to help your business achieve its organizational goals. What do they demand in return? To be treated and compensated fairly. When it comes to compensating employees, you need to give them their fair share of benefits, appraisals, promotions, rewards, and above all—a market-competitive salary. What you pay employees should not only be in line with their workload and skillset but also with the amount of effort they’re putting in.
In this post, we’ll talk about some common payroll mistakes that most businesses make:
At times, employees misunderstand their employees to be contractors and vice versa. Let’s say a designer comes in occasionally to help you with graphics, and you pay them on a one-time basis. After some time, your business needs their services more frequently, and you set up a special workstation for them. Do they classify as a contractor if they’re providing the same services every month? No!
First up, this can lead to issues as far as taxes are concerned. As an employer, you have to pay and file taxes on behalf of both your company and your employees. By classifying your everyday employees as contractors, you’ll be understating the total payroll tax amount. Other than that, you might also be paying them less than what the average employee in that role earns.
The monthly paycheck your employees get is only for their pre-defined working hours. Any services rendered beyond their job description need to be compensated. According to the US Department of Labor, all employers must pay a premium for making employees work overtime.
Overtime refers to work carried out in excess of 40 hours in a normal workweek. The pay scale for this time should be decided and communicated to employees at the time of hiring. The overtime salary can be calculated in several ways, including commission, hourly rate, and weighted average.
As per the provisions of the Department of Labor, it’s not permitted to pay a lump sum amount for overtime without any regard for the number of hours worked.
If you don’t pay, you’ll end up with unsatisfied employees who will start looking for other opportunities.
Proper record-keeping is important for two main reasons.
Firstly, as a business owner, landing in trouble with the IRS is the last thing you want. So in order to file taxes, you need to have accurate payroll-related data so that all the records are meticulously collected in one place.
Secondly, your employees have every right to document evidence of their payroll. They need these records to manage their personal finances and file their individual taxes.
Problems arise when companies carry out everyday record-keeping manually. As a result, they have heaps of files and documents that can easily get misplaced.
Not only do you need cupboards and considerable storage space to keep documents safe, but it also becomes hard to locate the required file. On the other hand, if you’re using accounting software like QuickBooks, all you have to do is put in the employee ID, and all the relevant payroll details will be brought up without any delay. This has another benefit; the fact that you can pay employees faster because payrolls will be generated much faster.
Another issue with manual record-keeping is its susceptibility to errors and discrepancies. It can get hard for a single accountant to keep track of so many tasks at a time—leading to mistakes. On the flip side, accounting software has built-in formulas that facilitate automatic calculations. You can also edit and rectify all the information whenever you want to without disrupting the final results.
When it comes to payroll, QuickBooks is the definitive enterprise accounting software that all small businesses need. The biggest benefit is that you don’t have to pay extra for a payroll module add-on. Every version of the software has all the payroll-related features. To get started, contact a QuickBooks hosting provider like gotomyerp.
Our consultants will not only guide you through the process but will also provide all the training needed to implement the software. For further details, head over to our website. You can also give us a call at (877) 888-5525.