Once we have any system in place, it’s easy to just let it run. But it’s wise to do a regular “check and balance” on all of your systems to make sure they are running efficiently.
Your payroll systems and processes are essential to your business success and must be in tip top shape. Mark Strippy, Executive Director of Heartland Payroll Services, says there’s no need for business owners to outsource payroll, but they need to be aware of some key areas that can get out of whack easily.
Here’s what he recommends you pay attention to.
1. Make sure you classify employees appropriately. Classify your employees into the appropriate categories such as temporary employees, consultants and other independent contractors to ensure payroll reporting for tax purposes is accurate. (Don’t get sloppy here.)
2. Track, report and calculate overtime pay properly. According to the Department of Labor, litigation claiming non-exempt employees who were treated as “exempt” employees and, therefore, not entitled to overtime — but should have been — continues to increase. (Don’t even take a chance with this.)
3. Don’t forget to distribute 1099 forms on time. Give your independent contractors who earn more than $600/year a 1099 form by January 31st of the following year. (That means do it now.)
How about you? Do you have some “payroll pitfalls” you’ve run into that you’d like to save another small business owner from? Please leave a comment.