Managing payroll can be a taxing process that extends beyond cutting checks and distributing them to employees, and if handled incorrectly, can cost thousands of dollars in penalties. With regulations constantly changing and varying from state to state, outsourcing payroll to a provider who is dedicated to staying on top of the changes for you is one way to alleviate your burden as an employer. But not all payroll providers are created equal. The payroll providers at DM Payroll Services discuss five mistakes in managing payroll and what to look for in your provider to best avoid them.

  1. Missing deadlines – From federal, state and local filings and deposits, to the myriad reporting requirements, the opportunities to miss a deadline is abundant and the penalty hefty. The IRS fines heavily on noncompliance and can shut down a business.
    Outsourcing your payroll takes the worry out of missing deposits and reporting requirements. Your payroll provider should know the rules applicable to your company and step in as the acting agents to ensure deadlines are met
  2. Inadequate record keeping and planning – Attention to detail is especially important throughout the payroll process in order to ensure compliance with various federal, state and local laws. Planning ahead and keeping thorough records for all employees also reduces the chances of misapplying pay rules and committing payroll errors, resulting in time and penalties saved.
    Know your provider’s policy as it relates to record retention and reporting capabilities. For example, DM Payroll never purges payroll data, and custom report writing allows you to gather the information you need quickly and efficiently.
  3. Miscalculating or mishandling garnishments – As an employer, you’re responsible for accurately calculating payroll deductions for court-ordered wage garnishments and remitting to the proper authority. In many states, employers can be liable for the full judgment amount against employees for failing to respond to a court order, as well as for withholding inaccurate amounts from pay.
    Look for a reliable provider to accurately calculate and help you track garnishments. Some providers, such as DM Payroll, will offer additional features such as direct payment of the garnishment to the appropriate agency.
  4. State unemployment tax errors – Payments of state unemployment tax can get tricky since different states have differing rules. Make sure you know the correct rate is being paid, the correct maximum amount of wages to report and how responses will be handled if a claim is filed. Failure to pay, or late payment of state unemployment taxes could result in the loss of the federal unemployment credit at the end of the year.
    Look for a payroll provider that serves all 50 states and stays up to date on rules and regulations for each. DM Payroll serves businesses across the nation and has the expertise to handle out-of-state employees.
  5. Lack of knowledge or payroll experience – You, as the employer, are ultimately held accountable for reporting and paying all payroll taxes correctly. Not understanding the requirements and staying on top of the laws can be the biggest mistake of all, but it’s a burden that is easily alleviated by outsourcing your payroll to a reliable provider.

To take the worry out of your payroll process, contact our DM Payroll Services providers in Michigan or Houston.