Let’s face it: as a payroll professional, you have a lot of worries associated with your job. The payroll department is the backbone of every company. It’s highly unlikely that there’d be any employees in the building if your team wasn’t there doing its job every day!
Let’s look closer at four compliance nightmares that may be keeping you up at night and help you get back to counting sheep and drifting off to dreamland:
Nightmare #1: Inaccurate payroll record-keeping.
While every department has its version of a clerical error, those involving payroll can easily snowball into much larger problems for the company. Depending on your state, you may be required to maintain employee payroll records for four to seven years, creating an even larger window of error for inaccuracy, lost files and other disasters. Having 100% accuracy as a goal is a lot of pressure on a team, especially if you are working with a manual system.
Electronic record-keeping can help streamline this process as well as give employees access to their own records and paperwork. Not only will this help you be more accurate and make it easier to keep things neatly filed, it will also reduce the frequency of times employees come to you to request old records. Having a timeclock system that automatically creates payroll records can also help eliminate extra steps and reduce the margin of error in your records.
Nightmare #2: Ever-changing legislature around payroll rules and regulations.
This is probably the most frustrating issue on the list and, unfortunately, the most constant. Across the country and from state-to-state, legislators are regularly re-writing the rules you need to follow. Non-compliance can be extremely costly and involve lawsuits, employee settlements and a myriad of issues that could have been avoided. The last thing anyone in your C-Suite wants to hear is the word “lawsuit.” However, there are some simple steps you can take to protect yourself and your company.
Using HR and payroll software that is automatically updated with these new policies and information can help reduce the risk of accidental and unintentional errors. Not only does that help you avoid missing new updates to payroll procedures or legislation, it also reduces the work of having to dig for this information yourself. For an added layer of protection, we also suggest checking reputable news sources for updates to legislation and policies.
Nightmare #3: Privacy breaches on your sensitive data.
While most people fear their personal information being stolen by hackers and other cybercriminals, you’ve got a whole team’s worth of information to worry about protecting. Not only are 52% of security breaches are caused by human error, but identity theft and money rerouting through a payroll system hack can be an especially egregious crime to clean up after.
So what can you do to prevent this? Well, one of your first lines of defense should be educating your employees to help reduce the risk of phishing scams, account hacking and various other forms of cyberattacks. Encourage them to protect sensitive passwords and other personal information. You should also limit who has access to these sensitive records as much as possible to further manage the risk of a data breach or identity theft. Lastly, using the most up-to-date payroll systems will help ensure that your software can protect your company from ever-evolving forms of security breaches.
Nightmare #4: Making an error when filing taxes.
Whether it’s a late payment or an error in worker classification or withholding, taxation mistakes can be a doozy to clean up and can even lead to audits and fines. In fact, mistakes in employer payroll tax cost small businesses a collective $6 billion in civil penalties in 2015. Not only that, but discovering these errors can mean hours of extra labor for your team members, who will then have to scramble and work backwards to correct them.
However, there are steps you can take to avoid civil penalties and all the associated headaches. This is another instance where automating your processes with tax software can really serve you. Since the software will include up-to-date regulatory and tax functions, you will greatly reduce the margin of error for yourself and your team. Regularly checking the IRS website for new, state-specific tax information can also help you and your team stay compliant and avoid the snowball effect of problems that a taxation error can cause.
Do you have other payroll headaches that keep you up at night?? Let us know in the comments down below or fill out the form and we will include your suggestion into our next article.