The businesses set up in Portland range from large-scale to small businesses, and management of payroll is a significant aspect of running any business, but more importantly so for the small businesses because the tasks are generally more complex and prone to errors.
A plethora of owners have opted for payroll services for small businesses in Portland to minimize mistakes and improve overall efficiency at payroll.
A closer look at some common mistakes small businesses must avoid.
Incorrect Employee Classification
A common payroll mistake is classifying employees incorrectly as non-exempt or exempt or as independent contractors rather than employees. Such misclassification could lead to penalties from the IRS and incorrect withholding of tax.
Small businesses need to comprehend and accurately classify the workforce to avoid costly fines and comply with the prevailing labor laws in the state.
Failure to Keep Accurate Records
Records must be thoroughly and accurately kept because they are very much needed for the management of payroll. Small businesses often ignore the importance of maintaining proper documentation of tax filings, employee hours, and wages.
Improper records can result in miscalculations of wages and errors in tax reporting, which can potentially turn out to be a significant problem during audits, which is why implementation of a reliable record-keeping system is essential.
Missing Payroll Deadlines
Timely processing of payroll is vital to ensure the satisfaction and trust of employees. A consistent payroll schedule must be established, and small business owners must stick to it. Outsourcing can be an effective way to ensure timely payments and help automate the whole process.
Inaccurate Tax Withholding
Another prevalent mistake that can have some severe consequences for small businesses is incorrect tax withholding. Over-withholding and Under-withholding can result in interest and penalties from the concerned tax authorities.
Small businesses need to be updated with the tax laws and make sure accurate withholding is stated based on the W-4 forms of the employees.
Neglecting to Stay Updated with Tax Laws
Regulations and laws associated with taxes keep changing pretty constantly. Businesses need to keep up with the changing laws by staying informed because failure to comply will result in penalties and fines. Small companies must consult with tax professionals or get payroll services to ensure everything complies with the updated laws.
Significance of Professional Payroll Services!
Mistakes are bound to happen because of a lack of knowledge in a particular field. Professionals are quite experienced in handling payroll processes. They can effectively manage and make sure there are no errors or mistakes made, which could potentially result in costly penalties and fines.