Instead, keep your payroll documents in a locked cabinet or a password-protected/encrypted file that only required personnel can access to ensure confidentiality amongst staff. Remote employees can use password-protected encrypted files or software that supports Advanced Encryption Standard (AES), as AES offers a high level of security and optimization. Also, having a manual system for managing payroll increases your reliance on one person to manage all payroll actions. Without an organized and automated payroll system, it’s harder for someone to fill in when the capital commitment definition payroll manager is out of the office or leaves the company. It can also set you up for problems in the event of an audit or process review. It’s hard to follow tax laws and regulations if you don’t know what they are.
Company
Provide training so that everyone involved in payroll processing understands the new policy. If the delay is significant, manually offer adequate advances to your affected employees. You will also likely need to consult with your legal team if the cut-off dates are legally mandated (i.e., they should be paid every 14 days).
Incomplete records
Companies need to carefully track where their employees are working and for how long, as even temporary relocations can sometimes trigger new tax obligations. It’s also important to consider the impact on benefits administration, as health insurance plans and other benefits may need to be adjusted based on an employee’s location. As remote work continues to evolve, companies should strive to create flexible yet compliant policies that can adapt to changing workforce distributions. Regular communication with employees about their PTO balances can help prevent end-of-year rushes to use time off and ensure smoother workforce planning. If you have employees (and contractors) in different countries, there are some unique payroll errors that you might encounter.
With the rise of remote work, many companies struggle to manage payroll for employees working across different states or countries. The shift to remote work has created a host of new payroll challenges. Some states have reciprocity agreements that simplify taxes for cross-border workers, but these agreements are not universal. International remote work adds another layer of complexity, potentially involving issues of permanent establishment for tax purposes and compliance with local labor laws. Poor record-keeping can lead to compliance issues and make it difficult to resolve payroll disputes. Accurate record-keeping goes beyond just storing pay stubs and tax forms.
Payroll can be time-consuming — particularly if you have a limited payroll and HR team, but that’s where payroll software comes in handy. That might mean cancelling the payroll and reprocessing it or planning changes to counteract the previous mistakes in the next payroll. In this instance, if HR doesn’t follow the set process, whoever is running payroll has something to fall back on. The relevant form to file is Form 941-X, Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund. This form notifies the IRS of any over or underreporting of payroll taxes.
How to Write Up an Employee in 8 Easy Steps
The easiest way to prevent miscalculations is to invest in automated payroll software, like Remote. This reduces the risk of manual and human mistakes, and automatically calculates the correct amounts based on the data entered. Are the workers also correctly classified as nonexempt employees?
- Today’s global workforce, remote and hybrid work environments, and the ever-changing regulatory landscape have added additional layers of complexity to payroll.
- In 2019 alone, the US Wage and Hour Division of the Department of Labor recovered a record $322 million in back pay for misclassified employees.
- Create a manual describing all of your payroll activities, including when payroll exceptions are made and the procedures for reviewing and approving changes.
- In the time it takes to fix those errors, employees can grow frustrated or even have trouble paying their bills.
- Not reporting these other forms of compensation can result in tax filing penalties for your organization and the affected employees.
Not reporting all forms of taxable employee compensation
Wherever the errors occur, pinpoint the problem and offer mandatory training to close those knowledge gaps. Being able to spot the source of errors, particularly repeated ones, can help you pinpoint areas where additional staff training can help eliminate them altogether. Learn more about the critical importance of technology adoption, the benefits of an integrated tech stack, and the potential pitfalls of a “watch-and-wait” approach. Join over 140,000 other people and get valuable business tips delivered right to your inbox. Please note that this article does not cover all possible scenarios, and any discussions or viewpoints should not be considered legal advice. Readers are advised to consult with legal professionals for specific legal guidance.