Five Steps to Better Payroll

Written by: David Kravetz, Payroll Administration Manager

Payroll has grown far beyond the basic payment of money from employer to employee. There are numerous rules and regulations that must be followed, taxes and filings to consider, garnishments and deductions…and all of these must be done in a timely manner. Payroll can be extremely tedious and frustrating, so it’s no wonder that many businesses outsource their payroll or utilize an online payroll provider. The fees and fines associated with violations of payroll regulations are expensive. Below, we list five common payroll mistakes that companies should be aware of:

• Late Tax Filings and Deposits. Everyone knows about payroll taxes because everyone thinks too much is coming out of their paychecks. Along with employee taxes, employer taxes are also calculated each payroll. It is recommended that you keep a calendar showing when filings are due, to avoid penalties - which will be costly to your company. If you are an MMC client, we take care of all tax filings and deposits. 
• Not Paying Your Employees On Time. At the start of the year, a calendar should be sent to all employees to inform them of pay dates for the year. By law, employees must be paid within 7 days from the end of the pay period. If pay dates are missed, fines will be incurred. At MMC, we call and send out email reminders when payroll is due to ensure that all employees get paid on time.
• Mishandling Garnishments. It is very common for employees to have a garnishment for one reason or another. Once this occurs, it becomes the employer’s responsibility to make sure they are handled correctly. Not only does money need to be deducted from the employee’s paycheck, but it also must be sent to the correct reporting agency in a timely manner. Garnishments can be very difficult to calculate, especially if an employee has more than one. Research must be done to see which one has a higher priority and how much can legally be deducted from each check. The payroll experts at MMC handle all of this for the business owner and make sure everything is executed according to the law.
• Forgetting To Record Checks. When you write an employee a check, you need to make sure it is recorded for your bank records. Many times, business owners don’t have time or are in a rush, so they just write the check and don’t record it. This causes many problems when reconciling bank records – imagine all the paychecks, utility checks, invoice payments, etc. that are written throughout the year. CPAs and business owners can spend hours at tax time, trying to remember to whom and for what reason each check was written. If you are an MMC client, MMC handles all the recording of checks as well as the bank reconciliations. All checks are written on the MMC bank account, so reviewing the one amount that MMC deducts each pay period is simple.
• Forgetting To Update The State Unemployment Tax Percentage. Before the start of each year, the state will send out a new tax rate. If that amount is not changed, then the deposits that are made that year will be incorrect. Be sure to check to make sure you have the correct rate before you run your first payroll of the year. MMC receives their new rate in December, so by the time the first of the year rolls around, all new rates are entered and the correct deposits are sent to the state.

Of course there are many other payroll mistakes that can happen on a daily basis, but just five are mentioned here. Payroll can be a very complicated and tricky process, considering all the laws and regulations involved. MMC clients can rest easy, knowing that our experienced payroll administrators will ensure that all legal aspects are handled correctly. If you have questions on your payroll, please feel free to call MMC’s Payroll Department at (800) 899-6624.

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