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Top Payroll Mistakes Employers Make

When it comes to payroll, small mistakes can cause big problems if there is a failure to comply with local and federal payroll laws. This could mean penalties, hefty fines, and other more serious consequences. Here is a list of the top payroll mistakes employers make:

  1. Making deductions from non-exempt employees to pay for things such as tools and equipment, travel expenses, uniforms, and unreturned company property.
  2. Misclassifying employees as independent contractors. Generally, if you control what kind of work will be done and how it will be done, then they are an employee, not an independent contractor.
  3. Not paying the additional overtime due on employee bonuses and commissions.
  4. Withholding mistakes. These include failure to withhold federal and state taxes, excluding taxable fringe benefits, inaccurate calculation of pretax and post-tax deductions and issuing incorrect W-2 forms.
  5. Unorganized record keeping. In the case of an audit, it would go much more smoothly if payroll records were organized and sufficient documentation was available.

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