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The process of payroll can be defined as the distribution and calculation of salary, wages, and taxes for your employees. When you run a business, you are responsible for making timely salary payments to your employees. In Canada, the same is not possible without complying with the requirements of the Canada Revenue Agency (CRA). Also, by managing your payroll without the help of professional payroll services in Edmonton can cause you to make some mistake. The common payroll mistakes you may probably make include the following.
Misclassification of Employees
When you have a business and manage a payroll system, you are entitled to a payroll tax based on the number of employees you are paying wages or salaries. Often business owners make a mistake of classifying their employees as contractors instead of employees. Never make this mistake as the money paid to contractors is not taxable. This will eventually cost you more as you will have to pay the tax along with the penalty for misclassifying an employee as a contractor.
Forgetting Payroll Tax
One of the biggest mistakes is to completely forget about payroll taxes. When you have a payroll system in your business, you need to pay taxes for the same. Based on your federation, state and local taxes, there are different types of taxes which may apply to you. Make sure to find out which payroll taxes apply to your business and file them on time to avoid being penalized.
Not Planning Your Payroll Schedule
Every business has a different payroll schedule based on the owner’s convenience. You could be paying wages or salaries to your employees on a weekly, biweekly or monthly basis. This payroll schedule has a direct impact on your monetary operations, the profit earned and the cash flow. If you do not plan your payroll schedule and simply keep changing the duration in which you pay your employees, it will directly impact the capital you have at the end of the month. As a result, your budget planning for future investments in the business could be hindered.
Wrong Calculation of Overtime
With constant work and deadlines in business, overtimes are bound to happen. What you need to worry about as a business owner is to make sure you keep an eye on your employee’s overtime. According to The Fair Labor Standards Act (FLSA), it is mandatory for you to pay more for the overtime done by your employee. Making this overtime payment can be complex as you may have to follow the hourly wage laws of the state. To make it easy, find out beforehand how you plan to pay your employees for overtime.
Not Maintaining Payroll Records
Often experts emphasize the need to maintain proper record when running a business. Not just your accounting records, make sure to maintain your payroll records as well. The time of audit is when these records will be of great help. Remember for any company, maintaining at least three years of payroll records is a must.
Managing Payroll Alone
Having a business to run and simultaneously managing various aspects of a business can be too much for one person. With a lot to do alone, mistakes tend to happen. When dealing with the matters of your business accounting, finances, and payroll, you cannot afford such mistakes. Mistakes in your payroll could have a direct impact on your employees. To avoid this, make use of payroll services in Edmonton. Having a professional to work on your payroll system will reduce the chances of discrepancies.
When you have a well-planned payroll system, making timely salary payments to your employees becomes easy. So make sure to work on your payroll better with the help of the finest payroll services in Edmonton.