Payroll is a significant expense for most businesses, but even a small oversight or miscalculation could result in serious risk to your business continuity.
Mitigating those risks is an essential task, but those interventions can be approached in various ways. Choosing a payroll service is a smart way to reduce the risk for a long list of potential issues, but before you dive in, it is important to know what you’re up against.
Let’s take a look at which payroll processes present the most risk for small businesses:
Processing errors could be accidental or intentional, such as an employee deliberately altering a payroll record or inputting the wrong information. Generally, a little distraction is all it takes to set the chain of events in motion. A payroll service reduces or eliminates processing errors, so you can stop worrying and get back to what you do best.
Missing Your Payroll Tax Deadlines
All businesses with employees must remit payroll tax on a specific day each month. If these taxes are left unpaid or are paid past the due date, you could be liable for penalties. According to the IRS, more than 40 percent of businesses in the United States pay more than $800 per year in penalties.
Using a payroll service ensures your payroll taxes are always remitted on time, helping you save time and money that could be put to better use elsewhere.
Your payroll can tell you a lot of things, including providing insight into employee engagement. For example, a report from a payroll service will highlight excessive time off or patterns of attendance that might indicate a looming HR problem.
Today’s job market favors the candidate, meaning that companies have to do everything they can to ensure job satisfaction. One way to do this is by tracking performance and awarding bonuses. A payroll service automates various metrics, ensuring your valued employees get the perks they deserve.
Inadequate Tracking of Holidays, Sick Pay, and so on
From stat holidays to vacation pay, sick days, and more, a payroll mistake of this kind not only costs you money, but it will also throw your finances into turmoil while you sort it out. Rules for employee payments change all the time, and it’s crucial to stay on top of it. A payroll service for small business ensures you are always compliant with current regulations.
Lapses in Security
Manual payroll systems are notoriously insecure. Files and data are kept on local drives and computers, paper files in drawers that are accessible to just about anybody. If data is maintained digitally, there is always a risk that your security software may fail.
With a payroll service, you can count on the latest data security and compliance tools, mitigating risks such as loss of reputation, lost revenue, impaired competitive advantage, and the legal and financial implications associated with a data breach.
In conclusion, for small businesses, a payroll service is more than just a convenience. It is a way to stay on top of your company’s financial health and mitigate a long list of potential risks.