The payment of salaries is the most taken-for-granted process in the corporate world. Whereas it is also the most essential one. It seems easy to calculate. But many things can go wrong with the payroll if there is not proper payroll software to help with it. It can cause horror if not done properly. It brings discontent to the employee and extra expenses to the company. If there is no disaster management at work to correct it and avoid repetition, this can result in damaging the image of the firm.

The company has to pay attention to various aspects of the payroll. They need to stick to the regulations to stay out of any trouble. There are different benefits and types of payment that need to be taken care of. Mixing it up can cause problems. Damage control eats up the time, that rather be invested in something productive. The underpayment may happen due to many mistakes but the overpayment is also as big a problem for the employee. As they are bound to pay it back and no one wants to go through those complicated procedures. Below listed are a few payroll mistakes that must be avoided.

  • Misclassifying an Employee

The most common mistake in calculating payroll is putting employees in the wrong category. This can happen when the person who is supposed to get a salary is considered an independent contractor or freelancer. There’s a difference between the working hours of a freelancer and a regular salaried person. The method, rules and policies for calculating their wages also differ. This can make a big variation in an overall calculation. When a regular employee is considered a freelancer, they miss out on all the benefits they are supposed to get with the salary. This can happen due to negligence or the history of the person previously working as an independent contractor. The necessary changes should be made in their records immediately to avoid such mistakes in the future. The repetition of the mistake is just a waste of time and money. As the proper payroll is a basic among the responsibilities of the firm. Its failure also poses a question on the competence of an organisation.

  • Miscalculating the Pay

Miscalculation of pay is a major issue. It brings frustration to the employee when they get less than what was supposed to be paid. This may be a disaster when there are huge variations and employees are unable to pay their bills. While organizations try to correct the mistake, workers may need to pay some penalties. This adds to initial frustration. This kind of incident affects the productivity of the workforce. Their focus often wonders about the issues related to their pending bills for which they hold the organization accountable. They stay with the disturbed mind till the issue is resolved. Meanwhile, dissatisfaction also affects the interaction with their colleagues. It can spread negativity in the work environment if there is no quick resolve.

When these things happen there is a need for correction outside the regular payroll cycle. It requires time to investigate the necessary changes. This is extra work that can be avoided with the right payroll management system.

  • Not Tracking Working Hours Correctly

Not keeping up a systematic record of working hours can lead to problems. The data of working hours is important for both full-time employees and freelancers. The failure to note it correctly is bound to cause horror in the end payment. This can also lead to overpayment that may be costly to an organisation, or an underpayment that will breach of trust for the staff member. It is important for proper attendance and to reinforce discipline in an organisation. It also affects the payment of overtime work. Sometimes there is confusion related to the number of paid and unpaid leaves taken. Corrections always take time and effort. This is avoided with a proper payroll tracking system or software. That keeps a record of working days so that there won’t be a need for manual entries in some handwritten or online sheets.

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  • Making Late Payments

Payroll must be done in time. This is an obvious expectation from the workforce to get their salary on the promised date. If for some reason payroll is delayed, it makes people worried.  Ignoring bank holidays while processing your payroll can be the reason for the delay. It is important to keep the bank holidays in mind. If the scheduled payroll falls between these days it will be processed only when working days resume. The delay is bound to happen. Meanwhile, your staff will be expecting their salaries as scheduled leading to disappointment.

The delay might be just a couple of days or more but it has a similar impact. It’s a failure to compensate your employee on the set schedule. This sends out the message that the company might not be doing well financially or facing some issues. When the payment delays occur frequently, the people may think about switching the job. So they don’t have to face anxiety every month about the salary credit. When employees are doing their duties properly on time, it is natural to feel betrayed when their salary it’s not paid similarly.  Make the schedule for running your payroll in advance and stick to it so that there will not be any delay in the future.

  • Failure to Pay Overtime Wages Properly

When an employee working outside their regular hours they expect to be compensated for it appropriately. The payment of these wages should be made following all the standards. Keep a proper record of the working hours of your employees so that you do not miss the overtime. This is an extra time they are taking out from their personal time. If they do not receive any payment or there are miscalculations they are likely to feel betrayed. As soon as you notice a mistake it should be rectified. If it isn’t taken proper care of, they might refuse to work overtime when the company needs it the most. Also, make sure that the processing is not exempting a member from payment of overtime wrongly. The staff should be always properly compensated for their time.

  • Mistakes in Paying Taxes

Follow every rule when it comes to paying taxes. Make sure that the taxes are paid in time. A failure to do so might result in regulatory action against the company. Keep the systems up to date with new rules and changes that are required to avoid any kind of legal problems. The taxes are to be paid with every payroll. If there is a pile-up, it will make a huge issue. It is best to be careful while calculating and paying taxes to avoid complications.

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Missing Salary Payment

You may miss out on some people in your payroll cycle. This usually happens to new employees who joined recently and are supposed to receive their first salary. It is easy to understand how important the first salary is for an individual. And when the salary is not credited there is a shift from excitement to disappointment. This acts as a first bad impression about the company’s payroll system. They might even lose respect for the firm as an authority figure and may show negligence in their work output. A salary is an important factor. It won’t act loud if it’s there as expected. When it’s gone it affects the work environment and performance so, make sure that this does not happen.

Summary

The salary is a very basic expectation that employees have from the organisation. A failure to do a proper payroll with all the elements, on-time sends out a very wrong message for the workforce. Most people depend on their salary to pay their bills and schedule them according to the date of payment. When there are delays or miscalculations it causes unease in their mind. Correcting those mistakes takes time. There might be other complications that this individual will suffer during this period. They are likely to develop resentment, dissatisfaction and lose their trust towards the company. The best way to avoid all this is to have proper payment processing software that takes care of everything from tracking working hours, vacations, set alerts for bank holidays, and can do all the calculations for taxes without any mistake. Thus keep the firm out of unnecessary trouble. It has a significant impact on how your employees perceive the company. So make sure that there are no mistakes. When it comes to payroll calculation prevention is always better than cure.

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