Payroll mistakes can lead to some serious  consequences that can cost your business time and money. By taking the time to understand and avoid these mistakes, you can save yourself a lot of hassle while keeping your business running smoothly.

1. Not Maintaining Accurate Records

This is critical for a smooth payroll process and for paying taxes correctly. It’s important to keep a detailed record of all employee hours worked and the amount paid for each pay period. This includes overtime and any bonuses or other add-ons. Not having accurate records can lead to problems when it comes to reporting wages to the IRS and calculating withholdings and benefits. It also makes compliance with state and local payroll laws more difficult. Accurate records are key to keeping track of all employee wages, taxes, and withholdings.

2. Not Tracking Hours

Proper tracking of all hours worked is key to paying employees for the time they have worked. This means not only tracking time spent on the job, but also any time off or other breaks employees may have taken. Accurate time tracking practices can help ensure that your employees are paid accurately and on time. This is especially important for exempt employees who are not eligible for overtime.

3. Not Paying Employees on Time

This is a critical issue for employees who rely on timely payment for their wages. Not only does this lead to frustration and dissatisfaction amongst employees, but it can also lead to legal problems. If an employer frequently fails to pay employees on time, the employees may take legal action against the employer. Employers may face penalties from state and federal agencies such as the Department of Labor. To ensure timely payment, you should establish a set payment schedule and ensure that payroll is processed in a timely manner.

4. Not Withholding the Correct Amount of Taxes

This is essential when hiring employees as tax withholdings must be calculated and reported to the IRS. For employees, this means not having to worry about a large tax bill at the end of the year. Employers are also responsible for providing employees with Form W-2s each year, which should accurately reflect the employee’s total withholdings for the year.

5. Not Offering the Required Benefits

This can include benefits that are required for certain employees under federal and state law, such as health insurance, vacation time, and worker’s compensation. Employers must also pay any taxes or withholdings associated with these benefits. Failing to do so can lead to hefty fines and other penalties. It is important to consult with a payroll professional to ensure that you are providing all of the necessary benefits and complying with all applicable laws.



It is important for you, as a small business owner, to be aware of these common payroll mistakes and take the steps necessary to avoid them. Not only does this make payroll processing more efficient, but it helps to ensure that employees are paid accurately and on time. It is also important to ensure that all withholdings are correctly reported and that required benefits are offered to employees. Help your small business save time and money while keeping your payroll operations running smoothly.

Call us on (571) 440-7777 or EMAIL one of our friendly team to book an appointment today.