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It is no secret that 20 percent of small business fail their first year. Payroll mistakes are the primary reason. Getting a grip on your payroll can ease cashflow and help keep your company afloat. Payroll is also dependent on other systems that you need in place to make sure everything is running smooth.
Here are six payroll problems your business should consider as you move forward:
1. Human Error
Humans make mistakes. Employees enter incorrect hours on timesheets. Time cards get lost. Employees forget to clock out. Supervisors fail to track overtime. Human Resources managers make data entry mistakes. Employees do, too. If simple human error was isolated, the problem wouldn’t be such a concern. Human error, however, often causes a domino effect and can cause trouble down the road.
Automated time and attendance can help reduce or even eliminate opportunities for human error to affect your payroll.
2. Missed Deadlines
For most small businesses, payroll comes too often, too fast. If you are the typical small business owner, you spend your week worrying about pleasing customers. Operational demands often come as an afterthought and are the reason we spend late nights at work. Payroll deadlines simply can’t be missed. There are penalties to be paid if you do, and not all of them financial. There are also federal, state, and local tax filing deadlines to worry about.
Automation can help you save a lot of time in preparation for payroll. Automated time and attendance, advanced scheduling, and payroll integration are key. It also helps to have a good payroll company to back you up and take the burden.
3. Compliance
Compliance is a big issue that is often forgotten. It isn’t simple, and it requires constant vigilance. Laws change and new regulations are popping up all the time. Compliance with the Fair Labor Standards Act (FLSA) is the most common area of trouble for small businesses. Affordable Care Act (ACA) regulations need to be considered. Healthcare providers have to contend with Payroll Based Journaling (PBJ) requirements. The list goes on. And on. And on.
It helps to be running your time and attendance, scheduling and payroll on a system that is up to date. Automated payroll and time-keeping will help alleviate most of the concern.
4. Preparing For Audits and Legal Challenges
No one likes an audit. And few business owners think about them until they occur. Preparing for an audit can steal a lot of time from your focus. Preparing for an audit without good records can be terrifying.
Preparing for an audit should be a matter of automation. When you use modern time and attendance tracking and payroll integration, your records are always ready. Use time and attendance software that runs in the cloud, so backups are off-site and available 24/7. Audits no longer need be a frightening event.
5. Improper Employee Classifications
Incorrect employee classification is a common payroll pitfall. It’s amazing that this is a common reason for business failure, but it is.
The three critical classifications are:
- independent contractor
- hourly non-exempt
- salaried exempt
The “exempt” refers to overtime protections. Non-exempt employees earn overtime when they work more than 40 hours a week. Exempt employees don’t earn overtime. Improper classification of an employee can result in fines or non-compliance penalties. Employees might not receive credit for the right pay scale, resulting in a short paycheck.
Employee classifications are a thing of the past with an advanced time and attendance system that automates employee classification tracking and integrates with payroll so records are reliable.
6. Cash Flow
Cash flow can sink your business quickly. Many of the problems we have discussed have roots in cash flow. When funds are low, owners and managers can become desperate. Scheduling and time and attendance can have a huge impact on cash flow. Unplanned overtime can sink a business without you even knowing. Overstaffing can drain your budget when income doesn’t match the resources.
A human capital management solution with integrated scheduling can help you avoid these problems. Efficient time and attendance management can help you save time and increase productivity. With our platform doing the heavy lifting, you can optimize your cash flow.
Request a free demo to learn more about how GTM helps clients focus on growing their business instead of managing timekeeping headaches.
