Paying your employees is an important part of keeping your business running smoothly, but certain payroll activities can end up costing you if you're not careful. Follow these tips to help you avoid the top nine payroll mistakes that could impact your bottom line:

• Don't miss deadlines: Just as important as paying employees on time is paying the IRS and state agencies according to the required schedule. Missed deadlines often result in financial penalties that are entirely avoidable.
• Don't classify workers improperly: Employees get taxed differently than independent contractors and each state has different definitions. Correctly enter this information from the beginning, and make sure you update records when roles change.
• Don't forget to send 1099 forms: Independent contractors require 1099 forms for tax reporting. Make sure this is on your list of payroll activities for the end of the year.
• Don't make data entry mistakes: Automating data entry as much as possible can help you avoid costly mistakes. Cloud-based accounting systems make it easier to transfer information electronically, reducing human error.
• Don't forget to check for wage garnishments: If your employees owe child support or back taxes, it's up to your payroll administrator to make sure the correct amounts are withheld.
• Don't miscalculate overtime pay: Make sure each employee is properly categorized as exempt or not; underpayment can result in hefty fines.
• Don't forget to keep your files: Keep all payroll records for at least six years to demonstrate that your payroll activities are appropriately documented.
• Don't break confidentiality: Payroll activities are confidential and should be treated as such. Make sure that confidential files are secure and that only the appropriate staff members have access to them.
• Don't leave it to one person: If you rely on a single individual for all of your payroll activities, you could face a problem if they become suddenly unavailable.

Outsourcing payroll or using cloud-based systems can eliminate many of these potential mistakes. Cloud payroll has many advantages, but you still have to manage it well. For more information on cloud payroll and how you can make it work for your business, contact us today.