The Consequences of Poor Payroll Management
Payroll is a large part of owning a business and should always be taken seriously. Poor payroll management is associated with various negative results. Some businesses take a chance and hope for the best, but more and more business owners are combating possible issues by hiring a payroll company. Here are a few direct consequences of poor payroll management.
One of the most common problems with in-house payroll is overpaying employees, underpaying employees, or even paying employees late. Employees will probably forgive one late paycheck or a rare miscalculation, but after one or two errors even your best employee might start becoming wary. Employees paid correctly and on time and more likely to abide by company policies and have more work ethic than those unhappy with their payroll.
Employees are one thing, but dealing with the IRS is another. IRS regulations are difficult and can change any time throughout the year. This can cause your business to file the correct payroll paperwork on time with the IRS or local and state authorities. Many companies cannot afford the fees and penalties associated with these missed deadlines. Total penalties in the U.S. for payroll mistakes add up to billions of dollars each year. And while “I didn’t know …” may be an honest answer, it won’t protect you from a costly penalty.
Along with being prone to IRS penalties, small businesses are the most vulnerable and the easiest target for financial embezzlement. If you hire an individual to manage their fellow employee’s payroll, as well as their own, this can cause major issues. Not only will the employee be able to see others wages causing rifts in the workplace, but they also will have access to all the tools they need to take your companies money. Even if the employee you hired is a trustworthy individual, there is also the risk of your payroll software being hacked. Your server must be secure, and that is one of the best advantages to outsourcing payroll. A payroll company is likely to have the most secure software and technology to ensure nothing happens to you and your employee’s sensitive data that is required for payroll.
Lastly, one of the most important things for a small business owner is time. No matter how many employees a business has, payroll demands a great deal of time and attention to detail. Pay periods are back to back, and each one requires the business owner to enter large amounts of data and double-check for any errors. This is valuable time taken away from tasks a small business owner could be involved with instead, including service to valued customers. It takes time to keep up with all of the federal changes alone and that doesn’t even include the state payroll tax requirements and changes. Struggling to process payroll can waste a large amount of time, especially if it ends up not being done correctly.
The consequences of poor payroll management are all too real for many small businesses. The longer it goes on without a solution, the bigger the mess, and the more expensive it will be to clean it up. Money is a valuable thing and playing around with your payroll is an easy way to waste that hard-earned cash. Do you and your business a favor by outsourcing payroll. Relieving the day-to-day stress of payroll will leave you at ease, employees happy, and your business able to grow.
Payroll processing Help in Wilmington NC
BOSS is a growing firm of local business advisers who are committed to providing responsive service, strategic thinking, and competitive pricing to our clients. If you’d like help or to learn more about running a small business in Wilmington, NC give us a call at (910) 338-1198, stop by our new office located at 3901 Oleander Drive, Suite G in Wilmington, or click here to fill out our online contact form. We look forward to hearing from you!