Payroll can make up about 50% of a business’s total expenses, so it’s important to avoid all payroll mistakes and strive for 100% accuracy. This includes everything from paying employees what they’re owed, paying commissions on time, and accurately deducting for health insurance and other benefits.
Payroll mistakes can cost your business significantly in many ways – including from a compliance and employee satisfaction standpoint and financially. In fact, approximately one-third of businesses face IRS penalties each year due to payroll errors. One way to ensure complete accuracy and avoid payroll mistakes is to partner with an integrated hiring and talent management platform, which centralizes onboarding, taxes, benefits administration, hourly time tracking and time off tracking, among other HR processes. An integrated hiring and talent management platform can also offer the the following benefits.
Complete a Mock Payroll Run
Switching to a new payroll provider is a significant undertaking for any business – and mistakes can easily be made if information is not migrated to the new platform correctly. To ensure complete accuracy with the first payroll run using your new payroll provider, make sure to complete a dry run ahead of time. Time the dry run a few weeks before you officially make the switch, to ensure you have any kinks worked out and avoid the risk of paying employees incorrectly due to administrative errors.
Leverage an Exception Report
Have you ever completed payroll only to realize you made a mistake after the fact? With an exception report, you can have instant access to processed payroll data prior to officially submitting payroll. By reviewing the exception report, you can identify and correct employee records with incorrect withholding amounts. This report shows the amount withheld for each employee, as entered on a payroll check, compared to the calculated withholding amount. It also flags if any specific employees need to be double-checked – for example, if a part-time employee went on vacation and isn’t on the list to get paid, the exception report will flag this to make sure the information is accurate.
Review Your Benefits Reconciliation Report
Unlike businesses that use different platforms for various HR functions – including separate payroll and benefits platforms – partnering with an integrated talent management platform enables you to review a benefits reconciliation report with each payroll run. This report helps you identify which employees have not paid the anticipated amount to their benefits plan. For example, an employee might unknowingly not pay for benefits because they’re not being deducted from his or her paycheck, which results in your business covering the costs. For employers without a benefits reconciliation report, these errors are time consuming to identify – if they are even identified at all – and if they’re overlooked, the mistakes end up being costly over time.
Payroll accuracy is critical to your overall business success and profitability. But accuracy is only one of many things to consider when evaluating your payroll provider and considering whether or not to make the switch to a new one. To learn more about what your business should look for in a payroll and talent management system, read The Hireology Payroll Buyers Guide.