Payroll mistakes can be costly, if your company fails to comply with changes in the tax code.
To avoid issues with the Department of Labor or the Internal Revenue Service, it’s best to review your payroll processes.
Here’s a checklist:
- Naturally, you should regularly perform security scans, change complex passwords and take other security measures as well as update drivers on the computers used in finance. It’s also recommended that you check who has excess to your system and prohibit access by the people no longer allowed to use it.
- Be very careful about outsourcing your payroll. There are thousands of Google search results for “cloud payroll service fraud.”
- If you’ve been phished and hacked, you should alert the IRS right away at email@example.com. The IRS will want to know your company’s name, your employer identification number, your name, contact information, as well as a full explanation of what occurred.
- Verify to your satisfaction that your payroll software is performing well. For example, be sure of the recorded accuracy of the wages, tax deposits and tax returns. Obviously, correct any mistakes and take steps to make certain the errors do not reoccur.
- Review your company’s paid time off or personal time off Be certain you compel your employees to either cash out or roll over unused time-off and leave during the current year.
- Verify all IRS records. Whether you have a payroll firm or do it in-house, obtain and then review copies of your tax records. Check to be certain the right amounts of taxes are withheld, and that they are forwarded to the IRS as well as all applicable forms. Did you know you can use the full suite of IRS e-services? If not, here’s the link: irs.gov/e-services.
- Double check your W-2 coding for your workers’ pretax deferrals into retirement accounts.
- For any employee who resigns or retires, classify the final wages properly. Be sure to adhere to all company policies or applicable laws.
- Review whether you make any payments to workers outside of your payroll system. A typical scenario occurs when you make taxable business-expense reimbursements. If you do, develop a system that accurately records and processes such funds.
- Regarding fringe benefits, make certain that your deduction codes are accurate. Check the entire process.
- Make certain final 401(k) amounts or final paychecks are accurately issued. Review your process to guarantee these matters are properly handled.
From the Coach’s Corner, here are additional tips affecting your financials:
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9 Best Biz Coach Tips for Cost-Savings Include Risk-Taking – To do a better job of cutting costs, successful entrepreneurs take risks by optimizing costs. They understand that linear cost-cutting is in reality an avoidable trap.
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Tips for Strategic-Thinking in Finance: Your Staff, Individuals – Many companies want accountants and finance professionals who are strategic thinkers. But that’s not happening at most companies. Here are tips for managers and employees.
Finance Checklist for Strategic Planning, Growth – Strategic planning in finance for growth means avoiding trendy fads. Instead, it requires an ongoing down-to-earth approach in order to create value. Here are seven steps.
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“Many people remember to include miles to their clients or vendors. However, what about those trips to the office supply store, bank, post office? These miles add up. Do not forget the miles!”
– Jeffrey A. Schneider