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Six Common Payroll Problems To Keep In Mind



It is no secret that over 20% of small business fail their first year. Payroll mistakes are the primary reason.


Getting a grip on your payroll can ease cashflow and help keep your company afloat.

As it turns out, payroll is critical. Payroll is also dependent on other systems that you need in place to make sure everything is running smooth.


Here are six payroll problems you need to consider as you move your business forward:


One: Human Error

Humans make mistakes. Employees enter incorrect hours on timesheets. Time cards get lost. Employees forget to clock out. Supervisors fail to track overtime. Human Resources managers make data entry mistakes. Employees do, too.


If simple human error was isolated, the problem wouldn’t be such a concern. Human error, however, often causes a domino effect and can cause trouble down the road.

Automated time and attendance can help reduce or even eliminate opportunities for human error to affect your payroll.



Two: Missed Deadlines

For most small business, payroll comes too often, too fast.

If you are the typical small business owner, you spend your week worrying about pleasing customers. Operational demands often come as an afterthought and are the reason we spend late nights at work.


Payroll deadlines simply can’t be missed. There are penalties to be paid if you do, and not all of them financial. There are also federal, state, and local tax filing deadlines to worry about.


Automation can help you save a lot of time in preparation for payroll. Automated time and attendance, advanced scheduling, and payroll integration are key. It also helps to have a good payroll company to back you up and take the burden.



Three: Compliance

Compliance is a big issue that is often forgotten. It isn’t simple, and it requires constant vigilance. Laws change and new regulations are popping up all the time.


Compliance with the Fair Labor Standards Act (FLSA) is the most common area of trouble for small business. New Affordable Care Act (ACA) regulations are coming online and need to be considered. Healthcare providers will be burdened with Payroll Based Journaling requirements. The list goes on. And on. And on.


It helps to be running your time and attendance, scheduling and payroll on a system that is up to date. Automated payroll and time-keeping will help alleviate most of the concern.



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Four: Preparing For Audits and Legal Challenges

No one likes an audit. And few business owners think about them until they occur. Preparing for an audit can steal a lot of time from your focus. Preparing for an audit without good records can be terrifying.


Preparing for an audit should be a matter of automation. When you use modern time and attendance tracking and payroll integration, your records are always ready. Our time and attendance software runs in the cloud, so backups are off site and available 24/7. Audits no longer need be a frightening event.



Five: Improper Employee Classifications

Incorrect employee classification is a common payroll pitfall. It’s amazing that this is a common reason for business failure, but it is.


The three critical classifications are: 

  • independent contractor, 

  • hourly non-exempt, and 

  • salaried exempt. 


The “exempt” refers to overtime protections. Non-exempt employees earn overtime when they work more than 40 hours a week. Exempt employees don’t earn overtime.


Improper classification of an employee can result in fines or non-compliance penalties. Employees might not receive credit for the right pay scale, resulting in a short paycheck.


Employee classifications are a thing of the past with our advanced time and attendance software. We can help you get things set up so tracking employee classifications is fully automated. We can even integrate with payroll so records are reliable.



Six: Cashflow

Cashflow can sink your business quickly.


Many of the problems we have discussed have roots in cashflow. When funds are low, owners and managers can become desperate.


Scheduling and time and attendance can have a huge impact on cashflow. Unplanned overtime can sink a business without you even knowing. Overstaffing can drain your budget when income doesn’t match the resources.


Workforce management software with integrated scheduling can help you avoid these problems.


Efficient time and attendance management can help you shave time and increase productivity. With workforce management software doing the heavy lifting, you can optimize your cashflow.


Switch Today

PayNortheast offers a unified Human Capital Management portal that makes it easy to optimize the performance of your managers, employees, and business.

PayNortheast's solutions include Time & Attendance, HR Management, and Full Service Payroll & Tax Processing. PayNortheast's solutions are designed for busy employers like you who need to streamline scheduling, automate time and attendance tracking, maintain regulatory compliance, and decrease labor costs.

How much can you save? Check our PayNortheast.

We can get you up and running with Workforce Management Suite in minutes. Contact us today to book a demo.

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