5 Ways to Prevent Payroll Mistakes

by Deputy Team, 3 minutes read
HOME blog 5 ways to prevent payroll mistakes

Managing payroll can be one of the most time consuming and error-prone challenges facing business owners today. With labor regulations and litigations on the rise, payroll errors can also be costly to the business.

So, what can businesses do to avoid making mistakes on their payroll?

1. Ensure correct employee data

Payroll mistakes are just that — mistakes. And sometimes they occur because of incorrect employee onboarding information.

This is an easy fix. Create verification processes for both employees and managers to confirm that new staff have correctly entered their name, social security number, bank account deposit number, deductions for benefits), and have accurately filled out their information on their tax forms.

If you have the budget, an employee self-onboarding software can help your new employee complete paperwork electronically before the start date. And thanks to e-signatures, you’re able to ensure the employee has verified the information.

One reminder: Your employees might have life changes during their tenure, so have a process for staff to update their information. Things like changes in an employee’s address, marital status, or tax deductions can all impact payroll so build this into your plan.

2. Work with a compliance-first mindset

It’s late at night and you’ve had a long week. You just ran payroll and you’re struggling to reconcile taxes, employment regulations, and new requirements. How much advance notice were you supposed to give your employees of scheduling changes again?

Sound familiar?

Staying on top of all the laws can be tough, but it’s critical to eliminate unnecessary payroll mistakes.

Before a new team member starts their first shift, provide an estimate of where, when, and how often they’ll work. When schedules need to change, use compliance tools that automatically record schedule amendments, calculate the required predictability pay, and capture employee consent to the change.

Additionally, don’t forget to check with outside council if you have any questions about the complexities of your local, state, and federal mandates.

3. Eliminate human error

Common payroll mistakes are just human errors that any business owner can. Maybe you give an employee a bonus gift card and forget to record it on payroll. That well-intentioned award can actually negatively impact your employee if not listed in their pay. Manually processing payroll isn’t just time-consuming.

Think about all those hours spent pulling information from various sources, like your spreadsheets, timesheets, and banking information. Manual payroll can lead to miscalculations, oversights, and even missing key data. Plus, that makes record keeping and organization even harder.

Instead, use your favorite popular payroll software and integrate it into your time tracking software. With just a few clicks, you can run an accurate payroll. As an added bonus, these tools significantly reduce the time spent on managing employee schedules, timesheets, and payroll from hours to minutes per month.

4. Empower your employees

Preventing payroll mistakes (and potential future litigations) can be as simple as giving your employees the tools and processes needed to communicate with you and your managers about any payroll inaccuracies.

If your employees catch payroll discrepancies, have a formal process in place so they can report these issues and more importantly, you can quickly resolve the discrepancy before they become bigger problems. Use an easy communication tool or payroll discrepancy form where they can notify you or your managers on any timesheet or payroll errors.

Time and attendance tools can also allow your employees to review and verify their hours worked when they clock in and out which provides a layer of attestation protection for the business.

5. Increase security

As a manager, you’re looking for ways to keep both your staff and your business safe. And security is a big issue when it comes to payroll. Manually payroll leaves your business vulnerable to payroll fraud, like identity theft and misappropriation of funds. Fraudsters from an outside source can also steal employee tax and salary data if the business doesn’t have proper safeguards in place.

Using cloud-based solutions for time tracking integrated with payroll services can mitigate security risks, as these providers have advanced security measures in places such as two-factor authentication, data encryption, and security certifications to ensure your data is properly stored and protected. Additionally, most payroll providers have built-in security features that can alert your business of payroll fraud.

Take the pain out of payroll

From streamlined process to accessible schedules, there are some cost-effective tools to alleviate all those payroll headaches.

To find out more about the biggest shiftworker complaints — and how to avoid them — download The Definitive Workforce Management Toolkit.